Expanding Momentum in New Home Construction Offers Solutions for Homebuyers

Lisa Mailhot  |  July 12, 2023

Buyers

Expanding Momentum in New Home Construction Offers Solutions for Homebuyers

 

If you're currently searching for a home, you're likely experiencing a limited supply of available properties. The low inventory may be causing frustration as you struggle to find a home that suits your preferences. However, it's important to remember that opting for a newly built home presents a fantastic alternative. According to a recent publication by the National Association of Realtors (NAR):

Home buyers continue to be met with limited housing options during what’s typically the real estate market’s busiest season. . . . The current supply of existing homes is about half the level it was in 2019 . . . Meanwhile, the market for new construction is a bright spot.

To illustrate the growth of new home construction across the nation, let's examine a significant indicator called new residential completions. This metric represents newly built homes that have been finished and are ready for occupancy.

The graph below, utilizing data from the Census Bureau, displays the trend of new-home completions over time, including the long-term average for the number of completed housing units:

 

 

Looking at the left side of the graph (shown in orange), we observe that leading up to the housing crash, builders exceeded the average completion rate. This resulted in an oversupply of homes, ultimately leading to a decline in home values and the housing market crash of 2008.

Since then, new home construction has declined, and builders have failed to meet the historical average (shown in red). Consequently, the housing market has been grappling with a multi-year inventory deficit, contributing to the current shortage of homes.

However, here's the encouraging news: the green section on the right indicates that builders are now matching the long-term average, as reported by the latest Census data. This implies that they are introducing more newly constructed homes to the market than in recent years.

Additionally, residential starts and permits are gaining momentum. Starts refer to homes where construction has officially commenced, while permits are for homes where builders are planning to begin construction soon. The increase in both categories indicates a forthcoming influx of newly built homes.

What Does This Mean for Homebuyers?

The expanding number of newly constructed homes at various stages of completion means that your pool of options has just grown larger. If you're looking to move promptly and timing is crucial, reach out to a local real estate professional who can guide you toward recently completed homes in your area. If construction is complete, you should be able to move in quickly.

Alternatively, if you have the flexibility to wait and the idea of customizing a home appeals to you, consult the same agent about homes under construction in your area. By purchasing a home in progress, you can have a say in selecting features and finishes along the way. This personalized touch may be the best option when none of the existing homes meet your preferences.

Regardless of your approach, enlisting the services of a trusted real estate agent is vital. They possess knowledge of what's available in your area and can make recommendations based on your specific needs, desired neighborhoods, and more.

Bottom Line

If you're struggling to find a home you like due to the limited inventory, it may be worthwhile to explore the option of new home construction. To initiate this conversation and ensure you work with an expert who knows what's available in your area, let's connect.


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