Home Builders Expect Slowdown
By JOHN SPENCEJuly 13, 2006; Page D4
The housing market will continue to cool down after the multiyear boom, with slower price increases and fewer housing starts as interest rates move up, according to a report by the National Association of Home Builders.
"We are coming off a very strong couple of years for the housing industry, and markets are now starting to cool to more sustainable levels," wrote David Seiders, chief economist of the Washington trade association representing home-construction companies. "Each market has different factors that affect its local economy and housing market, but overall we are forecasting an orderly slowdown in housing starts," he said.
The average price of a home increased 13.2% last year and 10.8% in 2004, driven by coastal markets, according to the Office of Federal Housing Enterprise Oversight.
But that pace is expected to cool in 2006 and 2007.
"Higher house prices together with higher interest rates have dampened housing demand throughout most of the country, bringing demand more in line with supply," according to the home builders report. "Already there are reports of downward pressure, or at least reduced upward pressure, on housing prices around the country."
Higher mortgage rates have helped take some of the steam out of housing. The 30-year, fixed-rate mortgage averaged 6.79% for the week ended July 6, according to mortgage lender Freddie Mac.
The report also examines the housing market on a state-by-state basis. While housing starts are expected to fall nationally after hitting their highest level in more than 30 years in 2005, states such as Idaho, North Carolina, Oklahoma, Washington and Wyoming are expected to see home construction increase this year, the report said.
By JOHN SPENCEJuly 13, 2006; Page D4
The housing market will continue to cool down after the multiyear boom, with slower price increases and fewer housing starts as interest rates move up, according to a report by the National Association of Home Builders.
"We are coming off a very strong couple of years for the housing industry, and markets are now starting to cool to more sustainable levels," wrote David Seiders, chief economist of the Washington trade association representing home-construction companies. "Each market has different factors that affect its local economy and housing market, but overall we are forecasting an orderly slowdown in housing starts," he said.
The average price of a home increased 13.2% last year and 10.8% in 2004, driven by coastal markets, according to the Office of Federal Housing Enterprise Oversight.
But that pace is expected to cool in 2006 and 2007.
"Higher house prices together with higher interest rates have dampened housing demand throughout most of the country, bringing demand more in line with supply," according to the home builders report. "Already there are reports of downward pressure, or at least reduced upward pressure, on housing prices around the country."
Higher mortgage rates have helped take some of the steam out of housing. The 30-year, fixed-rate mortgage averaged 6.79% for the week ended July 6, according to mortgage lender Freddie Mac.
The report also examines the housing market on a state-by-state basis. While housing starts are expected to fall nationally after hitting their highest level in more than 30 years in 2005, states such as Idaho, North Carolina, Oklahoma, Washington and Wyoming are expected to see home construction increase this year, the report said.
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