Real estate tends to be a popular topic of conversation at many social events throughout South Florida and the country. With this said, chances are that recent discussions have revolved around how quickly the housing market has slowed down from what we have seen over the past several years. Not surprisingly, factors such as high home prices combined with rising mortgage rates, 40-year high inflation, and a recession have had a huge impact. It appears as though it is not just the existing home market that has slowed down considerably.
New home construction slowdown
According to data from the U.S. Census Bureau and the U.S. Department of Housing and Urban Development, new residential construction fell 9.6% in July 2022 from the pace seen in June 2022. When looking specifically at new construction of single-family homes, they dropped 10.1% as compared to the month prior. As for multi-family starts, they decreased by 10%.
Interestingly, on a year-over-year basis, single-family starts were down 18.5%, while multifamily remained strong, with a 17.4% increase. Considering that the largest area of unmet need is in low-income, multi-family housing, this makes sense.
The housing market is certainly encountering some headwinds with high costs and rising mortgage rates, however there is also a persistent under supply of homes on the market. As a result, this should alleviate any concerns of a housing market crash in the near future. Of course, as more buyers are opting to sit on the sidelines, this is forcing more builders to pull back as well. Given the persistent low inventory of homes available, this is certainly a cause for concern as well.
In closing, although mortgage rates are significantly higher as compared to a year ago, they are still low from a historical perspective. As always, real estate investing requires proper planning, preparation, and knowledge. In the South Florida market, the Live South Florida Realty, Inc. team is ready to assist you with all of your real estate needs. Contact us today! While you are at it, be sure to download our free Florida Home Search App as well!