Business & Investment

LGI Homes CEO sees demand remain strong as mortgage rates rise

LGI Homes Chairman and CEO Eric Ripal Demand for housing remains strong in the face of rising mortgage rates, he told CNBC on Friday.

The day before, Freddie Mac reported a 30-year fixed rate mortgage Reached the highest level since July After eating 3%.And on Wednesday, the Mortgage Bankers Association’s seasonally adjusted index shows the total mortgage application volume. Last week was basically flat..

The housing market was one of the glorious spots in the US economy. Coronavirus pandemicWith increased geographical flexibility The lowest borrowing cost ever.. But, Recent Treasury Yields Rise Some people think about the impact on residential real estate.

“The demand seen in the housing market is still very strong,” Lipper said in an interview. “Closing Bell”

Based in Texas, LGI Homes is located primarily in nearly 20 states in the southern and western United States. The company focuses on first-time buyers, but Lipar said it sees strengths across the price range and region.

“From a historical point of view, I think interest rates are still very low,” Lipper added. “The mortgage rate we are offering to our clients is about 50 basis points lower than this time last year before the pandemic, when the market was still very strong.” 1 basis point is 0.01 Equivalent to%

Lipper, who has been CEO of homebuilders since 2009, said he believed that rising interest rates could somehow accelerate purchases.

“Prices have risen a bit, but it also gives buyers the urgency to go ahead and write a home contract as they see prices continue to rise and rise,” he explained.

Raising these prices is partly Rising timber and labor costs According to Lipar, the demand environment prevented LGI Homes from absorbing them.

“For now, we believe we can pass on these costs to consumers. Margins are consistent with LGI, but certainly average selling prices will continue to rise,” he said. Said.

Last year, the company’s average selling price was $ 253,000, Lipper said. According to Lipar, 2021 LGI Homes is expected to be between $ 260,000 and $ 270,000.

LGI Homes shares rose 2.8% on Friday to close at $ 125.14 per share. Inventory has increased by almost 41% in the last 12 months.

LGI Homes CEO sees demand remain strong as mortgage rates rise LGI Homes CEO sees demand remain strong as mortgage rates rise

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