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Mortgage rates showed little movement this week. According to the mortgage finance provider Freddie Mac, the 30-year fixed mortgage rate fell slightly to 2.86% from 2.87% the previous week. A year ago, the 30-year fixed mortgage rate was 2.99%.
Although mortgage rates are still historically low, rising home prices affect affordability, pushing more people to move to a more affordable area. In our latest study about migration trends in 2021, we are seeing that people continue to move away from urban centers while small towns and rural areas attract even more movers. During the first half of this year, the share of inbound moves for urban areas was 49% — indicating migration losses — compared to 55% for rural areas — migration gains. While home prices reach new record highs, affordability seems to be one of the primary motivations for this trend. A big draw for these smaller towns is that people spend a smaller fraction of their salaries while they are able to find bigger homes for their families.
Any evolving pattern of migratory behavior can have many policy implications for the country. As the data shows, there is a persistent urban-rural migration flow. In the meantime, although housing construction has slowed down, we are seeing more homes to be built in these small areas as there are great opportunities for homebuilders. While labor shortage is one of the main obstacles for homebuilders to build more homes, many of these areas have a higher share of construction workers than nationwide.
For instance, Wilmington, Raleigh, and Charlotte in North Carolina were among the areas with the most net migration gains in 2021 so far. In the meantime, all these areas have a higher share of construction workers than nationwide. Specifically, the share of construction workers in Wilmington is 8%; in Raleigh it is 7%; and 6% in Charlotte compared to 5% nationwide. It’s interesting and promising to see that these areas are building more homes than most of the metro areas across the country. For every 1,000 renters, there are currently 16 single-family homes being built in Wilmington; 35 single-family homes in Raleigh; and 24 single-family homes in Charlotte. In contrast, about 11 single-family homes are being built for every 1,000 renters on average across the country.
