The demand for new residential construction jumped sharply during the first half of 2020 in the USA. Analysts attributed this result in part to declining interest rates; during 2020, some experts predict a 3% overall annual increase in this specialized market. The average interest rate for a 30 year fixed mortgage loan stood around 2.95% by the end of June.
Impressive Statistics
The purchase of new homes surged in three regions of the nation during July: the Midwest, the South, and the West all witnessed double-digit increases in sales volumes. Only the Northeast experienced a drop in the sale of new homes. Rick Palacios, Director of Research at John Burns Real Estate, noted this segment of the realty market experiences “strong” demand at the present time.
For example, compared with 2019, median selling prices for new homes increased by some 7.2%. This figure nationally now stands at $330,600. During June alone, the purchase of new single-family homes also underwent an impressive rise to 13.9%. Real estate analysts reported the sale of U.S. new residential construction surged during July. It achieved a 14-year record, in fact.
Fueling Demand
Possibly several factors have contributed to the rise in demand for new homes in most regions of the nation. Yet many analysts attribute increased sales activity to exceptionally low mortgage interest rates. This factor permits buyers to move into homes with reduced payments (compared to payments in an era of high mortgage loan rates.) The national average of 2.95% for a 30-year fixed mortgage rate at the end of June will translate into considerable cost savings for homebuyers financing their realty purchases.
The availability of lower rates for new home purchases may also ease the ability of some lower-income buyers to qualify for a mortgage. Some real estate analysts predict this situation will continue into next year. Projected home mortgage interest rates hovering in the 3% range for the next 18 months, in fact. This trend should serve as a stimulus for the sale of new residential construction during the near future. These financial forecasts will please developers and home builders. Recently, analysts reported the availability nationwide of only a 4-month supply of new homes.