Over the past three months, the average mortgage rate has dropped significantly and while it should be a humongous advantage in the housing market, most of the reaction has been negated in terms of home sales, as well as the construction of new homes. One of the CEO’s of a U.S. home construction firm has spoken up and states that it is about consumer confidence; nothing more.
Over the past years, consumer confidence has been a big help when it comes to buying and building new homes, and in this past month, the confidence level of the average consumer has decreased significantly, as mentioned by a report provide by the University of Michigan. The reported document study states that consumers felt the need to be cautious about spending with the current anticipation of a recession.
With the mortgage rates lowering extremely, it didn’t increase the willingness for consumers to buy more, as a matter of fact, more homeowners think it’s a great time to sell their houses instead of buy a new one. That being said, the anticipated “shopping spree” of mortgage lenders lowering rates still hasn’t happened yet and part of the reason is because in the real estate market, prices are still extremely high in the “houses for sale” market.
According to other reports, lowering mortgage rates on homes have also hindered the desire for people to want to purchase new homes to be built as well, contrary to what the economic goal of lenders was. That being said, it may be a while before the real estate market truly picks back up again.