The real estate development industry has been one of the few thriving industries in recent years. With more and more people looking for affordable living options and investors seeking properties with good returns on investment (ROI), there are many opportunities for those who know where to look.

This article will define some economic trends relevant to all professionals in this field, including home buyers, sellers, developers, and brokers.

  1. Housing Prices Are up 7.1% Over Last Year

Nobody needs to be told that house prices are way up. Many expect the prices to continue to rise, with almost a 5.1% increase over the next year through May.

  1. Spending on Construction Is up

The rate of cost on construction has risen by 0.4% over the past year. Part of this may be related to rising material costs and inflation (see below), but the rates are well below the previous housing bubble rate.

  1. Housing Construction Material Costs Are Up Sharply

There are three key costs to any new home: land, labor, and materials. Of these three, the materials have been increasing at the fastest rate lately. The steepest growth has come in lumber, causing some supply chain problems for many builders.

  1. Income and Spending Are Going up (More Slowly Than Expected)

Personal income increased by 0.4% in May, while consumer spending rose only by 0.2%. This is still positive but not rising at a rate that many economists expected. As a result, many are pulling back on their estimates for growth in the coming quarters.

  1. Delinquency in Mortgages Is Still Going Down

Single-family serious delinquency (meaning three months or more past due or in foreclosure) has decreased to only 1.03%. With incomes continuing to rise and stay strong despite pandemic-related hardships, these rates should continue to decrease.

  1. Inflation Continues to Rise

Inflation reached 2% in May, which is its highest level since April 2012. However, the Federal Reserve’s inflation target has historically been treated as a cap, so time will tell whether interest rates rise to try to combat inflation’s growth.