Interest Rates to Remain the Same According to the Fed
A unanimous decision by the Federal Reserve the first week of June declared that interest rates would remain the way they were. This decision was made after reports revealed that the labor market is still not showing a strong recovery. Even though there are still job gains across the board, they are slow and business investment has also not picked up.
Home buyers have enjoyed and even taken for granted interest rates that are historically low for the past 10+ 
years. For those buyers who have been able to recover and succeed after the Great Recession, it is still one of the best times to buy a new home or buy an existing home in today’s housing market.
Predicted Rise in Interest Rate
Originally, the “Fed” had predicted that there would be two more rate hikes of the interest rate during 2016, but June’s meeting saw 6 members stating that with the slow growth of the economy, they only would really commit to a possibility of one more interest rate increase, citing the normalization of monetary policy taking a longer period of time than expected.
The good news is that the unemployment rate went down by 4.7%, but the gain of jobs in May, 2016, was only 38,000. Also, the job increases reported in March and April were revised down by 59,000 – a loss of 458,000 in the labor force.
Strong demand still exists for employees and contractors in the residential construction sector. The BLS JOLTS data shows that builders have approximately 200,000 unfilled positions. However, during the course of April and May, 9,600 jobs were lost in the residential construction industry, and these jobs are now having to be refilled.
First-Time Home Buyers
Because of the cost of labor and materials to build a new home, first-time home buyers are finding it hard to acquire a new home. Homes that are priced less than $150,000 account for only 6% of the market according to the National Association of Home Builders. Currently approximately 31% of the home buyers surveyed expected to be able to pay less than $150,000 for their new home.
New home buyers in the market to purchase a new home will still benefit greatly from the significantly and historically low interest rates. Any rise in the interest rate in 2016 will still probably keep the interest rate low enough to have affordable house payments.
