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Posted January 20, 2016
in Real Estate News

Low-Downpayment Loans, Low Mortgage Rates Push New Construction Ahead

U.S. Single-Family Housing Starts (2009-2015)

Mortgage Rates Boosting Housing Growth

Single-family housing starts dipped in December.

As compared to the month prior, starts fell three percent on a seasonally-adjusted, annualized basis to reach 768,000 units nationwide.

A "started" home is one on which ground has been broken. December's figures, although down on a monthly basis, mark a 6% jump from one year ago.

The nation's builders continue to scramble to meet surging home buyer demand which has been fueled by rising rents, cheap mortgage rates, and an abundance of low- and no-downpayment mortgages.

For example, the 80/10/10 piggyback loan has been in high demand of late, and buyers are finding the Fannie Mae HomeReady™ home loan to be a worthwhile alternative to FHA lending.

The math for "Should I rent or should I buy?" has shifted and this month's housing starts data reflects that.

It's an excellent time to shop for a home.

Click to see today's rates (Feb 6th, 2016)

"Single-Family" Housing Starts Matter Most

Each month, the U.S. Census Bureau and HUD co-publish the Housing Starts report.

Housing starts are broken in three categories, by property type.

  • 1-Unit Structures : Single-family homes such as detached residences, row homes and town homes
  • 2-4 Unit Structures : Multi-unit, residential residences with two-to-four units total
  • 5+ Unit Structure : Multi-unit, residential buildings with five or more units total

Structures with five or more units are more commonly known as "apartment buildings" and are characterized by a common basement, heating system, entrance, water supply and sewage disposal.

Each apartment unit is considered a "start". An apartment building with 150 planned units, therefore, is tallied as 150 housing starts.

In December, the government reports that Single-Faily Housing Starts dropped three percent from the month prior, while apartment starts also dropped three percent.

Apartment building construction is of little importance to buyers like you and me, however.

This is because apartments are typically built by, and owned by, developers to use for rental housing. The majority of U.S. buyers don't operate in this market. Everyday buyers don't build or purchase entire apartment buildings -- they live in single-family homes.

Tracking single-family housing starts, then, can be a better way to gauge the U.S. new construction.

Single-family starts are up 6% from one year ago.

Click to see today's rates (Feb 6th, 2016)

Builders May Raise Their Prices In 2016

With December's data, single-family housing starts continue their upward trend line. It's no wonder U.S. builders are optimistic for the future.

According to the National Association of Homebuilders, on a scale of 1-100, builder confidence hit 60 this month.

Readings over 50 are significant because when homebuilder confidence is 50 or better, it suggests "good" conditions for selling new homes. The market has been "good" for 18 straight months.

New construction remains concentrated in southern states.

The South Region, which includes Delaware, District of Columbia, Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia, West Virginia, Alabama, Kentucky, Mississippi, Tennessee, Arkansas, Louisiana, Oklahoma, and Texas accounted for 55% of last month's U.S. single-family housing starts.

The Northeast Region, which includes Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, and Vermont accounted for just 8 percent of single-family starts.

Click to see today's rates (Feb 6th, 2016)

Mortgage Loans For New Homes

The 2015 housing market was a good one. 2016 is expected to be even better.

Demand for homes is outpacing supply and mortgage rates are beginning the year low. Nationwide, unadjusted home values have surpassed last decade's peak.

Multiple-offer situations are common and homes are selling quickly.

If you've been in the market for a home, no doubt you've noticed. It's a competitive market and putting your best foot forward is essential if you want to "get the house".

The good news is that mortgage approvals are getting simpler.

In addition to reducing their loan approval standards, mortgage lender have recently lowered minimum credit score requirements, made concessions for self-employed income, and granted leniency on loans which "make sense".

Furthermore, there are more low- and no-downpayment loans available than during any period this decade.

In addition to the Conventional 97 program and HomeReady™ programs, which are backed by Fannie Mae and require just 3% down, demand for the FHA 96.5% LTV program is high, as are requests for "piggyback loans".

There are also the VA and USDA loan programs -- both of which allow 100% financing.

VA loans are available to eligible active-duty military personnel, veterans of the armed services, members of the national guard and reserves, and surviving spouses. They are optionally no money down and require no mortgage insurance.

USDA loans are also no money down, backed by the U.S. Department of Agriculture. USDA loans can be used in many rural and suburban areas nationwide.

USDA mortgage rates are typically the lowest of all government-backed loans, and mortgage insurance rates are minuscule compared to other low-downpayment programs.

With home prices expected to rise into 2016, the availability of low- and no-downpayment mortgages will be a boon to U.S. buyers -- especially if current mortgage rates remain low.

What Are Today's Mortgage Rates?

The housing market appears to be growing and mortgage rates remain cheap. If you're planning to buy new construction, the best opportunities may be the ones you find now.

Get today's live mortgage rates now. Your social security number is not required to get started, and all quotes come with access to your live mortgage credit scores.

Click to see today's rates (Feb 6th, 2016)

The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.

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2016 Conforming, FHA, & VA Loan Limits

Mortgage loan limits for every U.S. county, as published by Fannie Mae & Freddie Mac, the Federal Housing Administration (FHA), and the Department of Veterans Affairs (VA)