The U.S. housing market is undergoing a correction after two years of unrestrained price appreciation, with higher mortgage rates squeezing out buyers who were banking on new construction.
“We should anticipate fewer homes being built over the next 12 months,” says Zonda chief economist Ali Wolf. “The new-home market is struggling right now. Demand has cooled more than you would imagine this time of year.”
Devyn Bachman with John Burns Real Estate Consulting adds that many buyers who could afford houses would rather hold off than risk owning homes that could decline in value amid economic volatility. Significant drops in new-home development sales in June and July have made builders wary.
“Without a doubt, the first half of 2022 qualifies as a housing recession,” says National Association of Home Builders chief economist Robert Dietz. “Homebuilding’s going to contract. It’s kind of a reset.”
Home builders are trying to entice prospective buyers with various perks, such as buying down mortgage rates, offering fancier amenities and even cutting prices. Bachman foresees building slowing the most in the Pacific Northwest, Northern California, the Southwest and Texas.
Source: Realtor.com (08/11/22) Trapasso, Clare