The US Commerce Department just announced that new single
family home starts fell to their lowest level in 9 months, falling 13% to an annualized
rate of only 394,000.
The downturn in housing could be the result of increased
mortgage rates and the possibility that the Fed may start cutting back on the
stimulus package.
There could be another reason for the retreat of new home
building; tougher mortgage lending requirements. Incomes have remained fairly
stagnant and buyers are finding that the changing rules are keeping them from
obtaining a mortgage.
First time home buyers, especially new home buyers that want
to build, ask the FHA for assistance but they made some changes.
The FHA has doubled their upfront mortgage insurance
premiums which could cost a couple several hundred dollars added to their
mortgage payment making it impossible to buy a new home. Also, credit score
restrictions haven’t eased since the economy took a dump about 5 years ago.
People with credit scores under 700 are getting hammered with higher interest
rates. As if that wasn’t bad enough, the FHA has lowered their debt ratios.
It is more important than ever before that you, the new home
builder, really know your buyer’s financial scorecard before you begin doing
hours and hours of legwork and drawings just to find out that your buyers can’t
get a mortgage.
