The recent boom in new home construction has finally begun to taper of

Question

The recent boom in new home construction has finally begun to taper off. Developers are not
buying land, contractors are finding themselves going without work for longer periods, and
banks are issuing fewer mortgages. People must not be as interested in buying new homes as
they were even six months ago. Which of the following indicates a flaw in the reasoning
above?
A) Interest rates for home mortgages have increased significantly over the past six months.
b) The average size of a new home has increased significantly over the past several years.
c) Sales of condominiums have increased over the past six months.
d) The cost of materials such as lumber and cement has decreased over the past year.
e) Sales of other big-ticket items, such as automobiles and boats, has remained steady over the
past year.

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akashb106 · Accepted Answer

I am no expert but I an try and differentiate why C is a better choice than A. A) Interest rates for home mortgages have increased significantly over the past six months. ---- Interest rates for home mortgages have increased does indicate a flaw but not as explicitly as option C. But you have to assume that the people interest depends on the interest rates. I think this is not stated anywhere in the argument and hence a bit too much to assume. It is not necessary that people buy homes with the help of a home mortgage. C) Sales of condominiums have increased over the past six months.---- This directly indicates the flaw because if the sales of condos have increased more people are still interested in buying new homes. Perhaps there is are a lot of available apartments in the market right now so people are still interested in buying houses. An excess supply could also be a reason why developers are not buying land and contractors are out of work. And perhaps people do not need banks to buy condos. These were all just hypothetical situations but it shows that if people are buying condominiums, they are still interested in buying new homes. And of course B, D, E are out of scope. Hope this helps. :-D

Mahmud6 · Answer

If sales of condominiums have increased over the past six months, the following would not be true.

"Developers are not buying land, contractors are finding themselves going without work for longer periods, and banks are issuing fewer mortgages.".

So, option A is correct.

Bunuel · Answer

OFFICIAL EXPLANATION

The correct answer is A.

The conclusion of the argument is that "people must not be as interested in buying new homes as they were even six months ago." Why? Because of several factors (developers not buying land, contractors without work, banks issuing fewer mortgages) that the author assumes result from the supposed lack of interest in buying new homes. Choice A suggests, though, that there may be an alternative explanation for all of those factors: interest rates are too high for most people. So even though they remain interested in buying homes, they simply cannot afford to do so and the whole housing market has slumped accordingly.

gmatfighter12 · Answer

A) Interest rates for home mortgages have increased significantly over the past six months.--- Strengthen the argument
b) The average size of a new home has increased significantly over the past several years.-Not relevant 
c) Sales of condominiums have increased over the past six months.-Hold, this proves that people still want to buy condos
d) The cost of materials such as lumber and cement has decreased over the past year.-Very tempting but it does not have a strong connection with the premises as in choice c
e) Sales of other big-ticket items, such as automobiles and boats, has remained steady over the
past year.-Not relevant

Thus choice c is an answer.

jlgdr · Answer

Wow, can't believe I got this one wrong. But well, let's see. My reasoning was..
First, the conclusion: "People must not be as interested in buying new homes as they were even six months ago" because of X,Y,Z in the stimulus.
Now what I thought inmediately after seeing (A) was it is not that people are not as interested in buying new houses, maybe they are but it is more expensive now, so they can't afford it. So (A) indicates a flaw in the argument.

Now answer (C) seems like a nice choice, but still the problem is that we can't actually assume that these condos are new homes, if they are existing ones then it does not weaken the conclusion at all

I wonder what is wrong in my reasoning...
Experts please advice
Thanks

Madhavi1990 · Answer

My reasoning:

The recent boom in new home construction has finally begun to taper off.  Developers are not buying land, contractors are finding themselves going without work for longer periods, and banks are issuing fewer mortgages.   People must not be as interested in buying new homes as they were even six months ago. Which of the following indicates a flaw in the reasoning above?

I felt that the stem is asking us about the FLAW in the arrival of the conclusion - so we need to pick the gap in the argument than only weaken or break it.

(A) Interest rates for home mortgages have increased significantly over the past six months -  Coincides with the tapering of the boom. It clearly says: developers buy less, contractors are without work and banks give fewer mortgages. If we reverse the sequence we will know the clear reason - mortgages. People aren't choosing to buy less, they CAN'T as there has been an increase in interest rates. It would also explain that in case rates of interest DIDN'T increase, but fewer mortgages were given, development would still occur and boom may still be there. 
(B) The average size of a new home has increased significantly over the past several years.
(C) Sales of condominiums have increased over the past six months.  Condos still need to be built - if developers have overall slowed down, it doesn't give us any light as to why the conclusion is still 'the boom has slowed down'. That is, Condos would still contribute to overall revenue if it did increase. 
(D) The cost of materials such as lumber and cement has decreased over the past year.
(E) Sales of other big-ticket items, such as automobiles and boats, has remained steady over the past year.

Hope this was helpful!

AbhinavBankhwal · Answer

Answer according to me should be A and not C. Here's my explanation.

Option C if anything,weakens the conclusion. The sale of condominiums has increased and therefore it clearly tells that people are still interested. Moreover option C sounds very specific by mentioning condominium, while the argument only states homes. They could be individual houses as well.

(A) Interest rates for home mortgages have increased significantly over the past six months.

A flaw however, should not support the conclusion(weakening and not supporting are different). Due to the increased mortgage rates people are not willing to shell out so much extra money, while they might still be interested in buying homes. Points out to the flaw that increased mortgage rates are putting people off from buying new homes and not their lack of interest.

I hope my reasoning was satisfying.

Cellchat · Answer

Prediction: Look for another reason as to why less people are buying new homes.

CORRECT - this gives a reason for why less people are buying new homes - as they are becoming more expensive. In-turn, this dismantles the reasoning that people are becoming less interested in buying new homes.

Irrelevant. We cannot infer that this would increase new home prices or impact the interest of potential home buyers.

Remember we are concerned about new homes. Condominiums can't be inferred to mean 'new homes'. It is possible that these condominiums have been around for years and suddenly people are rushing to buy them.

If anything, this strengthens the argument.

Irrelevant. We are strictly concerned with new homes.

Shikhar22 · Answer

Condos mean new homes. That’s pretty obvious. My reasoning is this:

Since this is a flaw question and not a weakener:

Choice C would be weakener as it would add a new dimension to the stem to suggest people are buying homes as condos. So they are interested.

Whereas, mortgage is already included in the stem, and A provides us how mortgages are actually deterring interested people from buying. So this option is more of a flaw than the C one. That’s my understanding.

PS. I chose C too, but i understand how I was wrong,

Posted from my mobile device

Taulark1 · Answer

This doesn't seem like a flaw question, because flaw in the reasoning questions should not bring in outside information , rather should explain the reasoning behind why the conclusion doesn't hold true based on the evidence given in the argument

The answer is more of a weakner here, since its trying to say that some other reason is responsible for the construction boom to taper , rather than the people's interests.

Scuven · Answer

I replied wrongly by choosing C.

But now I can see why it's wrong.

The conclusion deals with HOUSES while the answer deals with CONDOMINIUNS (which is a FRACTION of all houses type).

That means that OVERALL the houses demand could decrease even though condominiuns demand increase and this can happen by a stronger decrease of indipendent houses.

samratj · Answer

Breakdown : Construction has begun to taper off recently. Why? Because developers are not buying land, workers are going without work for longer times, banks issuing fewer mortgages Conclusion - People might not be interested in buying new homes as they were six months ago. (We can argue with this but with the facts given above as they are true) Analysis: Just because people are not interested in buying new homes now construction has started to taper off? Or is there another reason why construction has slowed down? --> If we find an alternate reason why the demand has gone down then we can weaken the argument. (A) Correct - It is because interest rates have gone up now and people were buying homes at low-interest rates before. There is low demand because people cannot afford homes and not because people are not interested . It is the affordability that is the issue. (Alternate reason) (C) Strengthen - If sales of condominiums have increased over the past six months then it might be that people actually not interested in buying new homes now (no flaw in reasoning). Feel free to reply for further discussion.

RutujaDeshmukh19 · Answer

Let us break down the argument to understand it in a better way:

Statement 1: The recent boom in new home construction has finally begun to taper off. 
 
 This means that the construction boom which happened in the recent times is now coming down.  
 Statement 2: Developers are not buying land, contractors are finding themselves going without work for longer periods, and banks are issuing fewer mortgages. 
 
 The result of tapering of the boom is:
 
 Developers not buying land 
 Contractors not having work for longer periods 
 Banks issuing fewer mortgages   
 Remember: This statement is not pointing to the reasons or causes behind the boom. In fact, it is the result of tapering of the boom. (Very important)  
 Statement 3: People must not be as interested in buying new homes as they were even six months ago. 
 
 The reason behind the scenario mentioned in the statement above must be the lack of interest of people in buying new homes as compared to that six months before.

Summary: 
The boom is caused by the customers. In this case, the boom is caused by the people willing to buy new homes. The boom is tapering. Hence the developers, contractors and banks are acting as a reaction to the tapering boom.

Possible Counters to the argument: 
We can counter the argument by attacking that people are interested in buying houses but there are other reasons due to which they are not preferring to buy them. Any option that is inline to the above possible counter stated above is the right answer.

(A) Interest rates for home mortgages have increased significantly over the past six months. - Correct  
 
 This answer choice talks that the people are interested to buy new home, but the high interest rates is stopping them from doing so. 
 This states the reason behind the decrease in people's interest to buy new homes. This is a potential flaw in the argument.  
  (B) The average size of a new home has increased significantly over the past several years.- Incorrect  
 
 The increase in average size of the home does not have an impact on the interest of people to buy new homes. 
 Nothing about the size of the home required by the people is mentioned in the passage.  
  (C) Sales of condominiums have increased over the past six months. - Incorrect  
 
 Increased sales of condominiums shows that people are interested in buying the condominiums. 
 This is opposite of what is required.  
  (D) The cost of materials such as lumber and cement has decreased over the past year.- Incorrect  
 
 This is an incentive to increase the constructions. 
 Hence, this answer is not correct as it performs an opposite function of what is desired.  
  (E) Sales of other big-ticket items, such as automobiles and boats, has remained steady over the past year. - Incorrect  
 
 This does not affect the people's interest in buying new home.

ajayb1994 · Answer

Which of the following indicates a flaw in the reasoning above?

what type of question is this? I believed it was weaken type question.

Sneha2021 · Answer

GMATNinja   KarishmaB

Argument - The boom in new home construction has dropped off and people are not interested in buying new homes.

Please help me understand why A is better than C.
(A) Interest rates for home mortgages have increased significantly over the past six months. - I have to assume that interest rate does have an impact on the buying behaviour of people. What if they buy with their savings?
(C) Sales of condominiums have increased over the past six months. - This indicates a flaw that people are interested in buying homes in existing or new condo.

Thank you for your help!

Nipunh · Answer

confused between A and C, can't eliminate either.

pappal · Answer

Premise-->boom in new home construction --taper off
symptoms--> 1 developers not buying land 
2 contractors --out of work for long
3 banks --issuing fewer mortgages
Conclusion-->Peoples' interest in buying new home is reduced as compared to even last 6 months
need to find the flaw in the reasoning?
(B) The average size of a new home has increased significantly over the past several years.-  Incorrect  as it talks about past several years so should not have intended effect in the mentioned period.
(C) Sales of condominiums have increased over the past six months. -  Incorrect  as it says exactly opposite to the conclusion.
D) The cost of materials such as lumber and cement has decreased over the past year.-  out of scope 
E) Sales of other big-ticket items, such as automobiles and boats, has remained steady over the past year. -  out of scope 
hence correctly A) says that mortgage interest rates have climbed to taper off the boom discussed and not the interest of the people-- correct

Udantika · Answer

Hi Bunuel,

I know it's been a while but here's the logic I used. I am still not convinced with option A. Help me understand how I could be wrong here -

The conclusion of the argument rests on the premise that construction has slowed down which is a fact, so if we were to break that chain of assumption that low construction means less number of people buying = low interest in buying, we can prove the flaw in the argument. And the sale of condominium proves that. People are still purchasing existing houses, without the need of construction. Proves interest and breaks the causal relationship assumed in the argument.

The recent boom in new home construction has finally begun to taper of

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The recent boom in new home construction has finally begun to taper of

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