Chatham County contractors say they have steady demand for their services despite national construction of new homes decreasing amid rising interest rates.
The Federal Reserve last week announced it’s keeping the federal funds interest rate at a 22-year high and indicated it could be raised if inflation doesn’t continue to descend.
As the Federal Reserve raised interest rates from 0.33% in early 2022 to 5.33% this month, national construction of new homes dropped by 24%, according to Federal Reserve Economic Data.
While national construction of new homes is decreasing as interest rates rise, there’s not enough supply of houses in Chatham County for increasing interest rates to impact the demand for houses and local contractors, according to Chris Faughnan of Chatham Park.
Houses in The Vineyards, a growing housing development in Chatham Park, are selling at approximately 25 sales every 90 to 120 days, according to Faughnan, despite rising interest rates. In Encore, a 55-plus living community in Chatham Park, Faughnan said houses are selling at an even faster rate of 27 sales every 90 to 120 days.
These sales rates indicate that housing is in demand in Chatham County, so much so that one local contractor said they “may have even noticed an increase, if anything,” in demand while interest rates increased.
Suits Homes, a modular home building company in Siler City, is seeing an increase in demand, according to sales consultant John Babb.
Customers being pushed out of the custom home market by increasing interest rates and an influx of people from the Raleigh-Durham area taking up the existing supply in search of more affordable price points are driving Suits Homes’ increase in demand.
“It’s pushing people that are coming out of Raleigh that can’t get into the Chatham Park area because of the price points [...] [to us],” Babb said. “They’re looking for land and trying to figure out if they can build a [modular] house on it and be under what some of these mega subdivisions are charging.”
Chatham County’s housing supply issue could be compounded by economic development projects in the surrounding area such as Wolfspeed, VinFast and Toyota.
The three projects are expected to create a combined 11,050 jobs, according to press releases from Gov. Roy Cooper. And between the two megasites that Wolfspeed and VinFast sit on, there are approximately 1,800 acres still available for use, according to Chatham County Economic Development Corporation President Michael Smith.
If these projects bring their estimated number of jobs, they’ll bring employees to Chatham County that need places to live. For contractor in the area, that means demand will likely persist, if not increase, in spite of rising interest rates.
“We have the Toyota and Wolfspeed [and VinFast] megasites, [...] and those people need places to live,” said Sherry Allen of Realty World Carolina Properties . “I don’t think it’s going to be a huge impact unless interest rates bottom out.”