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“As inflation slows, mortgage rates decreased this week,” said Freddie Mac chief economist Sam Khater. “Still, the ongoing shortage of previously owned homes for sale has been a detriment to homebuyers looking to take advantage of declining rates. On the other hand, homebuilders have an edge in today’s market, and incoming data shows that homebuilder sentiment continues to rise.”
Odeta Kushi, deputy chief economist at First American, agreed, saying that builders are benefitting from the lack of resale inventory, but higher mortgage rates still pose a threat. According to the National Association of REALTORS, the inventory of unsold existing homes remained unchanged at 1.08 million in June, or equivalent of 3.1 months’ supply at the current sales pace.
“Reduced affordability alongside ongoing supply-side challenges and tighter lending standards for acquisition, development and construction (AD&C) loans could throttle builder momentum,” Kushi said.
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