New House Construction Decreases Again
Last February, new house construction experienced a decrease in spending, again. This is the fifth straight month that spending for construction has dipped, proving that the house building industry has been in its slowest in five years, and its lowest in 11 years.
Experts see the drop as the result of increasing number of foreclosed homes. With the rise in the number of properties being sold, new home construction gets fewer and fewer. To add to that, lenders have been extra strict on approving loans and other forms of credit, making it hard for people to start building homes, and even commercial establishments.
To compensate and cope with this scenario, home builders are offering new house construction at very affordable rates. This is to attract more buyers to solve the slow selling this spring.
Lennar Corp recently announced that a 30-year fixed rate mortgage has 3.625 percent interest rate. This is the best deal yet among all other offers from lenders. Hovnanian Enterprises Inc, on the other hand, give a 3.99 percent interest rate for home buyers.
Likewise, Toll Brothers Inc., a luxury home builder, was giving a 3.99 percent interest rate for its developments around the country. Although this offer has caused quite a stir and drove traffic to the company’s website, there was not enough action from consumers who were interested in new home construction.
More and more lending companies are offering other perks, aside from low interest rates. Some give complimentary all-expense paid tropical vacations. Some even subsidize the closing costs, while others even offer layaway plans.
For buyers of new homes, the offers of lenders and home builders seem to be very great deals. However, they should still be very careful in dealing with such. They should consider other factors other than the costs presented by the home builders. For instance, Lennar Inc. is actually giving the 30-year fixed interest rate only on select homes. This means that if your new home exceeds $417,000, then you are not qualified to avail of it.
Still there are some home builders that choose to veer away from the popular strategy in the market. KB Home, for instance, focuses instead on giving smaller houses or properties that are priced to compete with foreclosed homes. This strategy has helped the company get more new house construction projects.
