More new homes that no one wants to borrow money for
Despite dismal outlook, new homes are actually being built. Good news on the economic front, especially real estate, is a welcome change from the dismay that has become the norm. However, the number of people borrowing money for new homes is stagnant. Most new mortgage applications are for loan modification, not finance loans for a brand new mortgage and home. New home starts are one of only a few economic indicators that improved over the summer.
Four month high in home starts
New home construction has hit a four-month high. As of August, new home starts, with seasonal adjustment, have climbed to a rate of 598,000 per year at this pace, according to CNN. It was an increase of 10.5 percent. The bulk of the increase, though, was not in single family homes. New single family home starts marked an increase of 4.3 percent. The rate was adjusted to 438,000 per year. Single family homes are the engine that drives real estate. However, without people feeling secure that more pay days are coming, it is difficult to justify getting bank loans for a new home.
More permits granted
Before developers can build, they must get permits. Permits for new home construction increased as well. For August, there was an increase in permits by 1.8 percent. At this rate, 569,000 permits will be granted by the end of the year. The greatest increase in construction for August though, was multi-family homes. Multi-family dwellings had an increase of 32 percent. However, starts for buildings designed for multiple families are a constantly wavering statistic, so don’t expect to see apartment complexes break out like a virus.
A boost is a boost
Real estate has been one of the most dismal sectors of the economy for some time. Improvement and recovery is starting to happen. This August marked a 2.2 percent increase over last year.