Rising mortgage rates in recent weeks could signal a downturn in sales of new single-family construction in the months ahead, according to the National Association of Home Builders.
”April could be the peak sales month of the year,” said Dale Stuard, NAHB president. New houses were sold at a seasonally adjusted annual rate of 679,000 in April, up 4 percent from the previous month and the highest rate since April of 1987.
But since April, mortgages have been on the rise.
Stuard indicated that the October stock market crash, followed by concern over the trade deficit and the falling dollar dampened sales this year. ”Now everyone has caught inflation paranoia,” Stuard said. ”Hopefully, this will pass, too, and the Federal Reserve Board will get back to its steady-as-you-go monetary policy. Otherwise, interest rates will go up further, slowing housing and the overall economy.”
The unsold supply of new homes on the market fell from 7 to 6.6 months, meaning that it would take about 6 1/2 months to sell the current inventory at the current sales rate.
NAHB projects 620,000 new sales for the year, a drop from the 671,000 sold in 1987. That forecast, Stuard said, is dependent on keeping fixed-rate mortgages at 11.5 percent or lower.
