Should You Buy a New Home?
If you're looking to buy a home, you might be looking at previously owned properties. However, with so few houses for sale today, it makes sense to consider all of your options, including a newly built home.
The Number of Newly Built Homes Is on the Rise
While there are more houses for sale now than at this time last year, the market still has a historically low number of homes available. One reason for this is years of underbuilding, which means that not enough new homes have been built to meet demand.
The graph above shows how low the production of newly constructed homes has been over the past 14 years. But it also shows another important trend: the number of new homes being built each year is on the rise. As Mark Fleming, Chief Economist at First American, shares, that’s good news for buyers:
“While existing-home inventory remains limited, the silver lining for home buyers is that new-home inventory is on the rise, and a new home at the right price is a pretty good substitute.”
Builder Incentives Can Provide a Boost
While there is a growing number of new homes for sale, builders are slowing that pace until they sell more of their current inventory. According to Logan Mohtashami, Lead Analyst at HousingWire:
“The builders have to work off the backlog of homes, but instead of 3%-4% mortgage rates, they’re dealing with 6% plus mortgage rates, which means they have to provide many incentives to make sure those homes sell.”
Many builders are now offering incentives to help buyers purchase these homes. Fleming also explains:
“The National Association of Home Builders reported that nearly two-thirds of builders were offering incentives, including mortgage rate buydowns, paying points for buyers and price reductions, which could entice potential home buyers.”
A builder willing to pay to lower your mortgage interest rate could be a game changer. Ksenia Potapov, Economist at First American, puts it this way:
“A one percentage-point decline in mortgage rates has the same impact on affordability as an 11 percent decline in house prices.”
Should You Buy a Brand-New Home?
Working with a trusted real estate professional who can help you weigh the pros and cons of each option is the best way to decide what type of home to buy. They are aware of which homes are available in your area and which builders may be offering incentives that are beneficial to you.
Despite the fact that there aren't many homes for sale right now, new home inventory is increasing, and many builders are offering incentives. Let's talk so I can help you weigh the benefits and drawbacks of shopping for a new home versus purchasing an existing one.
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