Indy homebuilding takes a hit from interest rates
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Indianapolis and other U.S. metros are on track to permit fewer new housing units than last year, according to Census Bureau data.
Why it matters: That's a problem for people facing steep housing prices. Experts estimate America is short over 3 million units of housing, either to rent or to buy.
- Indiana home prices saw an 8% increase since last summer, the 15th-highest increase in the nation, according to the Federal Housing Finance Agency.
- In the Indianapolis metro, home prices climbed 5.2% year-over-year.
Driving the news: The Census data says the Indy area is on pace to see the number of new housing units permitted per 10,000 residents drop by 12% year-over-year.
- That's a steeper drop than the projected 2% decline among all U.S. metros with at least 500,000 residents.
The big picture: Higher interest rates for loans are slowing new home and apartment construction, according to the National Association of Home Builders.
- Labor and lot shortages are also weighing on builders, per the group's latest survey.
Between the lines: Some areas, particularly fast-growing metros in the South, are seeing more homebuilding than others.
- Cape Coral, North Port and Lakeland, all in Florida, are projected to lead large metros this year in total new units permitted per capita.
What we're watching: A cascade of new apartments, financed when interest rates were lower, helped recently to slow rent growth.
- With the peak of the construction wave behind us, per an analysis from real estate services firm Cushman & Wakefield, landlords could raise rents.