A recent decline in the national property inventory has left buyers with limited options when trying to make the transition to homeownership. However, this may change in the near future.
Construction starts in August increased 2.3 percent, indicating there may be even more new properties for sale on the market in the coming months, according to a report from the Department of Housing and Urban Development. As a result, the construction rate on single-family homes rose to a pace of 750,000 units, up from 733,000 in July. One an annual basis, housing starts spiked 29 percent, the report said.
This development is on par with the growing sentiment among industry experts that the housing market may finally be in a more widespread recovery. This is especially pertinent to states, such as Nevada and Arizona, which were some of the hardest-hit following the real estate bubble burst.
However, for the time being, a lack of available properties currently on the market may constrict homebuying activity.
Mortgage application activity slides
In the week ending September 14, overall home loan requests declined 0.2 percent despite interest rates dropping to new all-time lows, according to a report from the Mortgage Bankers Association. A number of industry analysts anticipate market activity to continue operating at high levels during the fall and winter, but a lack of property options may be having a negative impact already.
The Purchase Index dropped 4 percent from a week earlier, which was the major contributor to the overall decline. Meanwhile, refinance activity rose 1 percent to account for 81 percent of all application activity, as current homeowners capitalized on affordable fixed mortgage rates to restructure their loans into more favorable terms.
During this period, the average rate for a 30-year FRM with a conforming balance fell to 3.72 percent, the lowest in the survey's history, the MBA said. Meanwhile, 30-year fixed-rate mortgages averaged 3.99 percent, also a new low.
With the economy building momentum and property values appreciating across the country, more households may soon find the financial safety and soundness needed to spur additional activity throughout the mortgage industry in the near future.