Bob The Builder
Looking to buy a house? Well now might be a complicated time. That’s right as of March of 2022 the housing market is seeing some of its lowest confidence since June of 2020. Looking at the numbers, The National Association of Home Builders’ monthly confidence index has fallen two points to a reading of 79 – representing the lowest level for the index since September. On top of that, this is the fourth month in a row that the index has declined. So, what could be causing this drop in demand? Well, Inflation is the primary culprit. With rising prices on construction builders are seeing less economic incentive to build homes. Moreover, as the Feds aim to ease the run-up in consumer prices, interest rates are rising in response. Overall, the housing market (which is already defined by sky-high prices and mortgage raises) has yet another financial factor pushing prospective home buyers away.
According to Robert Dietz, chief economist at the National Association of Home Builders “While low existing inventory and favorable demographics are supporting demand, the impact of elevated inflation and expected higher interest rates suggests caution for the second half of 2022”. Although some factors are in line with building activity, factors such as worker shortages, high prices, and limited material keep a tight grip on the degree to which builders can be incentivized. What do you think about the rising cost of homes? And will the costs go down at some point?
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.