With the economy improving and so many older millennials getting married and settling down, there’s been a rush of buyers hoping to close on homes of their own. So how come fewer people sought mortgages for newly built residences last month?
Thank Hurricanes Harvey and Irma for the decline. Mortgage applications for new homes dropped 20% from August to September, according to a survey from the Mortgage Bankers Association. They were also down 7.5% compared with September 2016.
“This is the only time we’ve seen a [big] drop in recent memory,” says Lynn Fisher, vice president of research and economics for the Washington, DC–based industry trade group. With the storms, buyers’ “attention was on other things.”
Plus, the hurricanes led to construction delays as many builders were forced to halt work on their projects.
Monthly mortgage applications for new homes fell 37% in Florida and 11% in Texas, according to the survey. And the rebuilding efforts could put a crimp in new construction in those areas.
“It may be hard for people in other parts of the states to hire enough people to help them build a home,” Fisher says. “You can image with all the cleanup activity, home repairs, home rebuilding, a lot of resources like labor will flow to the affected areas.”
However, she’s confident that builders and buyers will be back at it before long.
“By the end of the year, we might start to see things return to normal,” Fisher says.