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Home construction permits start decrease

By agedleadstore
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2 minute read

New home construction and building permits fell in April, as many buyers continue to be priced out of the market.

According to MarketWatch, housing starts fell 0.2% last month, to an annual pace of 1.72 million.

This figure is the number of homes that would be built this year if construction rates continue at this pace for the remainder of the year.

Meanwhile, permits for future homes hit a five-month low, declining 3.2%.

Single-family housing permits fell 4.6%, to 1.1 million units, while permits for buildings with five units or more fell 0.6%.

Builders attribute the decline to high prices for building materials and rising mortgage rates.

Rates recently reached 5.3%, which was the highest rate since July 2009.

According to the Mortgage Bankers Association, applications for loans also are down 15% on a yearly basis, which further confirms a cooling housing market.

While housing starts overall fell just 0.2%, single-family housing starts had a more dramatic fall, at 7.3%. The rate is now at 1.1 million units, which is the lowest level since October.

Single-family homebuilding has fallen in every region of the U.S. except the West, where starts for housing projects with five or more units rose 16.8%, to 612,000 units.

This is the highest rate since April 1986. According to Reuters, there is a high demand for rental apartments in the West.

Overall, record low housing supply remains, which experts say won’t be resolved anytime soon.

Despite these figures, market experts believe cooling demand can be of benefit to some homebuyers.

This means less competition in the market, as buyers who are now priced out have sought other options.

While mortgage rates continue to rise, some experts expect that they soon will plateau. Others remind borrowers that rates around 5.3% or higher are still historically favorable.

To get the best rate, experts say it’s more important to have a good credit score and low debt.

Even if a borrower isn’t quite ready to buy a house, experts say connecting with a mortgage lender and real estate agent now can help make the process smoother when the right home pops up.

Borrowers can get pre-approved for a mortgage at any time, and pre-approval can be a helpful way to gauge how much they can afford. 

From there, experts say, borrowers can use it to help them improve their financial situation for better loan options.

Photo by Rodolfo Quirós

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