New Home Construction Is Gaining Momentum
If you're looking for a home right now, you're aware that the number of homes for sale is restricted, and you're feeling the pinch of having fewer options. And, if you're having problems finding something you like right now, keep in mind that a freshly built home is a terrific choice.
As a recent article from the National Association of Realtors (NAR) says:
“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.”
Here’s a look at a key metric that shows just how much new home construction is ramping up nationwide. It’s called new residential completions. Basically, completions are newly built homes that are finished and ready to move into.
The graph below uses data from the Census to show the trend of new-home completions over time, including the long-term average for the number of finished housing units (shown in black on the graph):
As indicated on the left (in orange), builders exceeded that average in the run-up to the housing meltdown. As a result of the surplus of properties on the market, property values fell. That was one of the elements that contributed to the 2008 housing meltdown.
Since then, the level of new home construction has fallen off, and builders haven’t built enough homes to meet the historical average (shown in red). That underbuilding left the housing market with a multi-year inventory deficit. And, that deficit is part of what makes inventory so low right now.
But, here’s the good news. The green on the right shows that, according to the latest report from the Census, builders are matching the long-term average right now. And that means they’re bringing more newly built homes to the market than they have in recent memory.
And residential starts and permits are also gaining momentum. Starts are homes where construction has officially kicked off. Permits are homes where builders are planning to break ground soon. Since both are up, it’s a sign there are even more newly built homes coming soon.
What This Means for You
More newly built homes in various phases of construction mean your pool of alternatives has grown. If you're looking to relocate right now and time is of the essence, contact a local real estate specialist to learn about recently completed homes in your region. If those houses are built, you should be able to move in immediately.
If you can wait a little longer and the concept of creating a home from the ground up appeals to you, ask the same realtor about the homes in your neighborhood that are now under construction. If you buy a home that is still under construction, you can help choose the features and finishes along the way. And if none of the homes you've seen so far have piqued your interest, being able to customize one may be your best option.
In either case, a reliable real estate agent is an essential component of the process. They'll know exactly what's available in your area and can provide recommendations based on your specific needs, chosen communities, and other factors.
So, if you're having difficulty locating a home you like while inventory is so low, it could be time to investigate new-home construction. If you'd like to start that dialogue, let's connect so you can work with a local expert on what's available.