As per latest data published by the National Association of
Home Builders (NAHB), housing starts across the U.S. rose 5.9% in
the month of driven mainly by multi-family construction.
Housing starts for multi-family construction rose 26%,
rebounding from a decline in the previous month. On the other
hand, single-family construction declined 2.2%, narrowing from
the positive growth seen in June.
Though an unusually wet weather in the South and West pulled
down the single-family starts, rising interest rates, tight
credit availability and a limited supply of land and labor also
had a role to play.
With the recent improvement in economic conditions and the
housing market in general, mortgage/interest rates are edging
upwards to more normalized levels since May 2013. According to
the Freddie Mac mortgage survey, the 30-year fixed mortgage rate
has risen from 3.59% on May 23 to 4.40% as of Aug 15.
This has raised concerns among some analysts. High interest
rates dilute the demand for new homes, as mortgage loans become
expensive. This lowers a buyer's purchasing power. However,
another group of analysts believe that in spite of the recently
rising interest rates they are still below historical levels and
housing is still very much affordable.
Rising interest rates notwithstanding, some companies like
) witnessed increasing demand in all their housing markets in the
past quarter and were able to push pricing further. However,
others showed some concern.
D.R. Horton, Inc.
) noted at its fiscal third-quarter conference call that the
spike in interest rates slowed orders
Meritage Homes Corp.
), at its second-quarter 2013 conference call, admitted to a
little bit of cooling in July due to higher rates, but reported
that demand remained stronger than the Jul 2012 levels.
Moreover, supply of both new and existing homes remains
constrained by low home inventories. A shortage of land and labor
is restricting the construction of homes, both single and
multi-family. Home prices have thus started to move up with
market demand gaining momentum and supply remaining limited. In
fact, a group of analysts believe that rising home prices and
thinning home inventories have created a sense of urgency among
homebuyers who are now more anxious to buy a house before prices
shoot up further.
NAHB also reported that both the multi-family and
single-family construction sectors are performing better than
last year. Housing starts activity grew a solid 40.2% in the
Northeast, 25.4% in the Midwest and 7.2% in the West in July,
while it declined 7% in the South.
D R HORTON INC (DHI): Free Stock Analysis
KB HOME (KBH): Free Stock Analysis Report
LENNAR CORP -A (LEN): Free Stock Analysis
MERITAGE HOMES (MTH): Free Stock Analysis
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