US real estate'everything booming'… The largest in 14 years since the start of new housing

Construction of new homes in the United States has increased for the fourth consecutive month. This is because the mortgage (housing mortgage) interest rate has fallen to the lowest level in history, and homework has become more common and demand for suburban housing has increased. According to the US Department of Commerce on the 21st (local time), the number of new housing starts in December last year was 1.67 million annually. It far exceeded Bloomberg's market forecast (1.56 million). It is an increase of 5.8% compared to the previous month, which is an increase for the fourth consecutive month. It is also the highest in 14 years since the end of 2006.

 

The number of new housing permits that can gauge the future housing market trend has also increased significantly. In December of last year, the number increased 4.5% to 1.17 million cases (annually converted). It is the highest since 2006. It is somewhat unusual that the real estate market was booming amid the collapse of the real economy after the pandemic. It seems to be in line with the fact that various asset markets are showing super strength due to the ultra-mitigating monetary policy after Corona 19. According to Freddie Mac, a US state-run mortgage company, the fixed interest rate for the 30-year maturity as of the 14th was 2.79%. It rose slightly from 2.65% last week, but it is the lowest level in history.

 

In addition, housing regulations such as the mortgage loan ratio (LTV) and total debt service ratio (DTI) in the US are more relaxed than in Korea. Together with stocks, there is an environment in which real estate prices can rise. The supply and demand problem is also a big factor. After the pandemic, the demand for avoiding the crowded city center increased, and as the home-style working culture spread, the demand for moving to spacious suburban housing increased.