Last month, industrial production increased at rates faster than predicted. This serves as the latest sign that economy is finally beginning to boom this year. What about the housing industry? Can the same be said for it as well? Not right now. The development of new homes has increased, but it has yet to meet market demand. Compared to the last quarter of 2013, the values are still low and the drag on the economy because of it is being noticed.
Last month, production at utilities, mines and factories was increased by 0.7%. As for the expected values, they were around 0.5%. The stats may not look that good, but they still were better than what was predicted. Two months before, the recorded values were 1.2%.
For the manufacturing sector, the figures are encouraging but the housing sector is still low. Initially, it was the weather; at that time, the industry experts were hopeful that come spring, and housing would bounce back. Unfortunately, this prediction turned out to be wrong.
Considering the housing market, last month, activity levels increased by 2.8%. Compare this to the values observed last year, and you will notice a 5.9% decline.
So is it just the weather to be blamed for the poor performance of the real estate market or are there other factors that come into play? Indeed, the weather was an issue, but that is the past now. Activity has also been affected by other factors such as shortage of labor and not enough lots for development.
What about the future? Can you expect things to turn around? Homebuilders are not that hopeful. The slight rise in both home prices and mortgage rates has caused buyers to take to the sidelines.
A real estate professional told with us that compared to 2013, mortgage rates have risen more rapidly than people’s wages. This has caused buyers towards the lower price range to get edged out of the market.
The situation is a little distressing, but a report published by a reputed financial agency has some positive news to share. Mortgage applications saw a slight increase last week. The report also claims positive values for the entire month. Mortgage applications have rise by 15%.
While the housing market might not perform at expected levels, the conditions will probably get better in the months to come.