Mortgage Rate News

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Today, April data for housing starts was released. It shows a record low. Housing construction has slowed dramatically, especially in terms of apartment buildings. However, the data shows that single-family homes increased in construction in April. This latter bit of the data is being used — along with the fact that builder and government incentives are expected to encourage homebuying — to shore up the belief that the housing market should stabilize soon.

Indeed, Sam Zell, the real estate mogul, believes that the U.S. housing market will stabilize sometime this summer, according to Reuters:

“Housing market stability will appear sometime this summer,” Zell said, speaking before more than 2,000 people attending a luncheon at the International Council of Shopping Centers’ annual convention in Las Vegas. “I can’t tell you if it’s June 29 or August 1.”

The dearth of new supply should help the housing market find a bottom, Zell said. U.S. home builders have been forced to severely scale back on new homes, to an estimated 350,000 this year at current construction rates from 1.7 million in 2006.

There appears to be too much going on for the housing market to head much lower. While today’s new was somewhat disheartening (economists had expected a modest overall gain, rather than an overall loss), there is still some confidence that economic recovery will happen soon, lead by the housing market. Many are beginning to think that now is a good time to buy a home, with the deals that can be had.

In addition to the government inducements to buy (tax credits), many builders are offering incentives. Builders are combining their own programs — offering upgrades, special financing and more — with the government tax credits. Many builders will help homebuyers do what they need to do in order to claim the tax credits. In some cases, it is possible for homeowners to get between $15,000 and $20,000 in combine incentives from builders and the government.

With such inducements — not to mention the low home prices and low mortgage rates — it is no surprise that Zell and others like him feel that the housing market slump will soon come to an end.