By Staff Reporters
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Home builders face multiple demand and supply-side pressures. On the demand front, potential home buyers have receded from the market. Existing home sales slid 5.4% in June. Meanwhile, borrowing capacity has been curtailed by rising interest rates. The average mortgage rate has accelerated at the fastest pace in 35 years. A 15-year fixed rate mortgage is now about 4.8%, up from 2.2% a year ago. These factors have effectively destroyed demand. Meanwhile, the supply chain for home building material and the cost of labor continues to increase the cost of building new homes. This is why home builders’ sentiment dropped 12 points in June, according to the NAHB survey.
And, since March, with interest rates rising, the housing market cooling, and new home construction falling, demand for lumber has declined—and prices have followed suit. Lumber futures fell to just $500 per thousand board feet on Friday, or 62% below January’s $1,329 high.
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CITE: https://www.r2library.com/Resource/Title/082610254
FINANCIAL PLANNING: https://www.routledge.com/Comprehensive-Financial-Planning-Strategies-for-Doctors-and-Advisors-Best/Marcinko-Hetico/p/book/9781482240283
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