Mortgage rates have been falling sharply over the last three months, which should be incredibly positive for the housing market, but so far reaction has been muted in both home sales and new home constructio
Mortgage rates have been falling sharply over the last three months, which should be a major positive for the housing market, but so far reaction has been muted in both home sales and new home construction."I've always maintained over the years that consumer confidence means more than rates to the home buying decision," said Jeff Mezger, CEO of Los Angeles, CA-based KB Home.
The average rate on the 30-year fixed is now well below 4%; it was above 5% just last November. The drop in rates has not produced a great home-buying spree for either new or existing homes. Part of that is because home prices are very high and affordability is at a 10-year low. In addition, there is very little supply of homes for sale, especially at the low end of the market.
He added this caveat: "However, recent financial market events following when the survey data were collected could weigh on consumer views looking ahead." KB Home uses a build-to-order strategy, where buyers can take a base model, offered at the local median price point, and add what they like before construction. This is designed to help with affordability.
Ya think?