The residential construction market in the Des Moines area remained flat in May as rising mortgage rates pushed some potential buyers out of the market to buy new homes.
The 14 jurisdictions surveyed by the Business Record issued 420 residential building permits in May, up 12 from the 408 issued in May 2021.
“Interest rates are going up, but the caveat is that with every quarter-point increase in interest rates, it’s a pretty tiny amount added to your monthly mortgage payment,” Jenna Kimberley said. , president of the Greater Des Moines Home Builders Association. “Very price-sensitive buyers will notice the rise in interest rates, but many people have also been lucky enough to save over the past two years.”
Kimberley said the price of lumber has started to come down in recent weeks, helping to lower the cost of building new homes. Last week, Business Insider reportedthat lumber prices have fallen more than 60% since March.
The average interest rate for a 30-year home loan was 5.78% last week, more than a full percentage point higher than the previous week, according to Freddie Mac. The rise was the biggest one-week rise in the Freddie Mac survey since 1987, he said. In the same week a year ago, the average rate was 2.93%.
In the first five months of 2022, 1,670 residency permits were issued in the Des Moines area, down 12% from the 1,899 issued in the same period a year ago.
The average value of a residential building permit issued in May was $262,385, down 3.2% from April, when the average value was $271,028.