Momentum Is Building for New Home Construction

If you're currently engaged in the home search process, you're likely grappling with the challenge of a limited supply of available homes for sale, resulting in a restricted array of choices. If your primary obstacle is the difficulty of finding a property that meets your preferences, it's essential to consider the appealing option of a newly constructed home.

According to a recent article from 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."

A significant metric illustrating the escalating trend in new home construction nationwide is referred to as "new residential completions." Essentially, completions denote newly constructed homes that have been finalized and are ready for occupancy.

The graph below utilizes data from the Census to depict the trajectory of new-home completions over time, incorporating the long-term average for the number of finished housing units (depicted in black on the graph):

As depicted on the left side in orange, leading up to the housing crash, builders surpassed the historical average, resulting in an oversupply of homes on the market and a subsequent decline in home values. This oversupply was a contributing factor to the housing crash in 2008.

Since then, the rate of new home construction has dwindled, and builders have failed to match the historical average, illustrated in red. This shortfall in construction has left the housing market with a significant inventory deficit over several years, contributing to the current low inventory.

However, there is encouraging news. The green section on the right indicates that, according to the latest Census report, builders are currently aligning with the long-term average. This implies that they are introducing more newly constructed homes to the market than in recent memory.

Residential starts and permits are also on the rise. Starts refer to homes where construction has officially commenced, while permits indicate homes where builders are planning to break ground soon. With both on the upswing, it signals the anticipation of even more newly built homes entering the market.

What This Implies for You

The increase in newly built homes at various stages of construction expands your pool of options. If you're eager to move promptly, connect with a local real estate professional to explore recently completed homes in your area. If construction is finished, you may be able to move in swiftly.

Alternatively, if you can afford to wait and are interested in customizing a home from the ground up, consult the same agent regarding homes in your area that are in the process of being built. Opting for a home under construction allows you to influence the features and finishings along the way. When none of the existing homes align with your preferences, the opportunity to tailor a home to your liking may be the best choice.

In any case, a trusted real estate agent plays a pivotal role. They possess knowledge of the available options in your area and can tailor their recommendations to your specific needs, preferred neighborhoods, and more.

In Conclusion

If you're struggling to find a suitable home amid the current low inventory, exploring new-home construction might be a viable solution. To initiate this discussion, reach out to a reliable local real estate professional well-versed in the offerings in your area.