New Home Construction Lending Updates for 2024

SEASON SIX, BONUS EPISODE | TRANSCRIPT

In this bonus edition of The Art of Custom, host Kim Hibbs sits down with returning guest Trisha McConkey of Associated Bank to break down the financial trends shaping the housing market. Recorded in February 2024, this timely discussion explores inflation, interest rate predictions, and how these factors influence both new construction and home financing.

Inflation, Rates & Market Confidence

After several years of aggressive rate hikes from the Federal Reserve, inflation is finally stabilizing which is good news for homeowners. While mortgage rates aren’t tied directly to the Fed rate, they’re influenced by 10-year Treasury yields and SOFR (Secured Overnight Financing Rate) trends.

Rates peaked near 8% in 2023 but have since dropped into the mid-6 to low-7% range. This downward trend is expected to continue through 2024, with forecasts calling for at least three Fed rate cuts by the end of the year.

Lower borrowing costs are already improving confidence among buyers, builders, and lenders.

Timing Lending & the Construction Market

Many would-be homeowners are still sitting on the sidelines, waiting for rates to fall further. Trisha cautions that waiting too long could mean missing the best opportunity.

Once rates hit their lowest point, competition for land, builders, and materials will rise quickly, similar to the 2021 building surge that drove prices up overnight.

She encourages homeowners to begin planning now while rates are falling and construction schedules are open, noting that design and permitting alone can take four to six months before construction begins.

Locking & Leveraging Lower Rates

Associated Bank’s one-time close construction loan helps homeowners protect themselves from market volatility. Borrowers can lock their interest rate during construction, then convert to a lower rate for a small flat fee once the home is complete without the cost or hassle of refinancing.

This flexible program gives clients peace of mind during the build, ensuring they benefit from both stability and future savings as rates decline.

For those outside Associated Bank’s Midwest footprint, Trisha recommends finding a portfolio lender that services its own loans, allowing for similar conversion options and personalized support throughout the project.

A Window of Opportunity

Chief Economist Robert Dietz of the National Association of Home Builders predicts that lower rates will continue through 2025, likely sparking another strong wave of homebuilding.

That surge could lead to higher construction demand and longer wait times. Kim advises homeowners to act within the next 6–12 months—when prices are stable, builder availability is high, and interest rates are trending down—to avoid the next cycle of cost escalation.

Closing the Housing Market Gap

Even with rates improving, the U.S. faces a significant housing supply shortage. Trisha emphasizes that the only real solution lies in new construction, since existing home inventory remains historically low. Builders will play a key role in balancing the market as more buyers re-enter in late 2024 and beyond.

This bonus episode underscores one key takeaway: it’s an ideal time to plan and prepare for your next home. With rates trending downward and industry confidence rising, homeowners who act early can lock in strong financial positions and avoid the rush ahead.

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