Construction Problems and Increasing Costs Affect Hawaii has consistently ranked near the top of the…
Will Higher Interest Rates Affect Building?
The increasing interest rates will have an effect on all purchases. By increasing interest rates, the Fed hopes to slow consumer activity, which has grown faster than the supply chain. That means that prices will increase across the board. The general thinking is that the higher interest rates will make it more expensive to finance everything from credit cards to houses, and businesses.
The increase in home prices and the cost of building supplies, along with the higher interest rates, can increase a monthly mortgage payment by $200 to $300 per month. The demand for housing is much greater than the supply available. That means that there will be a continued need for construction in the housing market.
In some areas of the country, some homebuilders are lowering prices as interest rates increase. Mortgage rates are increasing, with the average interest rate on a 30-year fixed mortgage climbing to 5.5%, Freddie Mac reported. The housing industry has always been sensitive to interest rates, and when borrowing costs increase, demand usually goes down.
In this situation, there is already a shortage of homes, so there is not expected to a major reduction in residential construction projects. Because of this demand, construction companies are expected to continue hiring construction workers for their residential projects.
Associated Training Services (ATS) offers a variety of training programs, including programs beneficial to those in the construction industry, such as heavy equipment operator training and CDL training. To learn more about the training programs available at ATS, call (800) 383-7364.
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