Posted February 02, 2018 06:22:16The amount of home construction loans outstanding as of March 31, 2018, as compiled by the U.S. Department of Housing and Urban Development (HUD) totaled $9,086,000, up 21.7 percent from the same date last year, according to data compiled by Bloomberg.
The number of new home loans issued in the U.”s.
surged to $6.8 billion in March from $4.3 billion a year earlier, driven by demand for construction equipment and home improvements.
The increase in home construction loan volumes was due to a variety of factors including a sharp jump in home sales, a decline in mortgage rates and rising interest rates, as well as lower mortgage rates as a result of a lower borrowing rate.
Homebuilders have been making home improvement loans to help borrowers get started on construction, which is a form of financing that often requires a loan to pay down the mortgage.
The average amount of money paid for a new home loan has grown to about $500,000 since 2000, according the Bureau of Labor Statistics.
The housing sector is now in its third consecutive year of double-digit increases in home loan volume.
The growth in the loan volume was driven by a rebound in home price growth in recent years, as a wave of homebuyers and renters started to move into the market and demand for home construction equipment has surged.
The boom in home building is expected to continue as builders increase the amount of equipment they use to build homes, said Robert Shilcutt, chief economist at UBS AG in New York.
The overall average interest rate on home construction is at the lowest level since March 2009, which also is the first time it has fallen in more than five years.
The low interest rate environment is helping to keep the U., a major source of new construction financing, afloat, said Shilcutson.
The interest rate was at a record low in March 2009 when home construction was still at a low.