Homebuilder confidence has held and remained the same in recent months as new home sales dropped. property loan rates have been at the root of many problems afflicting the US housing industry and now they are starting to take a toll on homebuilder shares; things could get even uglier as rates consistently move between 7% and realtors see property loan rates going as high as 8% even.
As part of Yahoo financial’s Real Estate: The New Reality special coverage this week, Wedbush Securities Equity Research SVP Jay McCanless describes the rate environment as having “gone from being pretty benign” at 2024’s start to “much more negative now than we would’ve expected.”
McCanless outlines how homebuilders are operating in this rate-sensitive housing industry and where he sees demand going based on the younger generations of homebuyers.
“The group is carrying less debt than it was five years ago and especially ten years ago. They are building the homes certainly more efficiently than they were back then, but at the same time, it comes down to monthly payment and the builders, I think they’ve done a good job of trying to shrink the size of the homes that they’re building, reduce the amenities that they’re putting especially in some the starter homes,” McCanless says. “But at the end of the day if the property loan rate’s gone up 100-something basis points like it has this year already, that’s just going to reduce the size of the population that can potentially buy a home.”About Yahoo financial:
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