Today’s release of the monthly housing starts and building permits data showed a 16% and a 5.4% drop, respectively for January 2014. This latest housing data was much worse than most economists had expected.
Actually, the declining trends in the housing market have been showing up over the past few months. The majority of economists have attributed the weakness to the severe winter weather, but myself and a small minority of economists believe it’s actually the modest increase in mortgage interest rates that are the primary culprit in the housing market slowed down.
Since a promise of lower health care costs actually became a substantial increase in these costs for the majority of middle-class workers. This is another factor that is reducing the disposable income and qualifying ratios that are required to buy a home in today’s market.
In another report by the mortgage bankers Association. It was shown that there was a 4.1% drop in mortgage applications for the week ended February 14. Again, this is not a surprising trend, as this data has been negative for the past several months.
