Was US’s Housing Growth Just a Phase?

Published By : 23 Dec 2015 | Published By : QYRESEARCH

As the year draws to a close, market analysts are realizing that the momentum in the housing industry in the US is cooling down with new homes in the country selling a much slower pace in November. 

After sales rose to a 470,000 rate in October, November saw a rise by 4.30 per cent to reach 490,000. This, however, was not up to par with what Bloomberg had predicted – 505,000.

The year began strong for the US housing scene but lately, the progress has been choppy, partially restricted by a limited selection of homes, which has resulted in the prices appreciating at a higher rate than wages. The demand will only be driven by continued progress in the labor market, which will result in higher pay. This, in turn, will allow builders to step up construction activities by renewing incentives. 

The lack of supply has led home prices to sharply rise over the past three or four years and that, analysts and economists feel, is the biggest drawback for home sales outlook. The sales rate, according to economists ranged between 400,000 and 550,000 after reporting a rate of 490,000 in October. Purchases in the previous two months were also reportedly lower. 

Confidence of the home builder is exceptionally vital for the outlook of the construction industry and in recent months, this has dropped despite being at a 10 year high. Even though builders are remaining optimistic, they are most definitely wary about increasing costs of labor and land. 

Borrowing costs are likely to be higher in the coming year. For the first time since 2006, the Federal Reserve raised its benchmark interest rate last week, giving the reason of strong expansion in domestic spending. Even though the Fed tried to prepare consumers, investors, and companies about the eventual end of the era of ultra easy money, it will still take some time to take action. 

Back To Top