April 25 (Reuters) – U.S. homebuilders will likely find it harder to raise home prices in the coming months as rising mortgage rates and inflation cut into demand, industry analysts said, potentially threatening a breakneck pace of profit growth.
D.R. Horton Inc (DHI.N), Lennar Corp (LEN.N), PulteGroup Inc (PHM.N) and other homebuilders are headed for a strong earnings season, but the U.S. housing boom is showing signs of a cooldown as sky-high inflation sets the U.S. Federal Reserve on course for aggressive rate hikes.
The rate for the 30-year fixed mortgage, the most popular U.S. home loan, climbed above 5% for the first time in more than a decade, making homes less affordable, especially for lower-income groups and first-time home buyers.
“First-time home buyers are getting a double or even triple whammy right now,” said Ralph McLaughlin, chief economist at real estate data firm Kukun, adding that the rate of price growth should “absolutely cool right now”.
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