New home construction is taking a big hit in today’s real estate market

Lots of home buyers are getting priced out of the market due to rising mortgage loan rates.

Most of the deals that are falling through are new construction, according to Cliff Freeman, a real estate consultant in North Texas.

“In the last seven months we’ve seen people who were buying houses, at say a $300,000 level, are now only able to afford homes that are 20 percent less than that,” Freeman said.

A real estate crash akin to the 2008 debacle is highly unlikely, he added. “We are definitely at an inflection in the market, there is a shift, but this shift is not going to be catastrophic. It’s not like we had in the Great Recession, seven million foreclosures.”

Buyers would be smart to lock in a mortgage at today’s rates to stabilize their buying power, Freeman added. “If you find something you like, and it’s in your price range, go ahead and lock in your rate, which are still considered pretty low right now.” During his 35 years in real estate, he’s seen rates as high as 14 percent. Rents are rising as well, so home ownership still makes the most sense.

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