New Home Construction Falling Behind Predictions for the First Quarter of 2014

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The housing market was sluggish during the first quarter of 2014 and it seems that new home construction followed the same trend. Builders started the construction of fewer homes than expected. Still, economists insist that their higher forecasts for 2014 will come true as construction activity will revive later during the spring season.

During the first quarter of 2014, builders started the construction of 133,900 new homes. This accounts for a 1.6% decrease from the first quarter of 2013. At the same time, the number of construction starts increased by 6% from February to March 2014.

Experts expected a higher figure for the first quarter, but it seems that the bad weather and the soft demand in the housing market have a negative impact on the construction industry. The falling supply of lend and the higher lend prices have also had a negative effect on housing construction activity. Despite these negative trends, the number of construction starts is expected to increase by 25% to 30% by the end of the year. This should be sufficient for the forecast of 1.1 million new starts made by Fannie Mae to be reached. .

The monthly increase of 6% from February to March is seen as a positive sign of spring revival. In general, many builders traditionally start their construction activity when the weather gets warmer in the spring. Another positive sign is that the building permits increased by 7% on an annual basis during the first quarter of 2014. This makes economists even more optimistic that their forecast will turn into reality.

The increase is housing construction activity is expected to have a major positive impact on the housing market, where inventory is currently very low and pushing prices upwards. As the inventory in the housing market increases, sales will go up. This will lead to a much awaited boost of the mortgage market as well.

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