New Home Construction on the Rise: Expanding Options for Homebuyers

If you're currently engaged in a home search, you're likely aware of the limited availability of homes for sale, leading to a restricted range of choices. If your main challenge is finding a home that aligns with your preferences, it's important to consider the excellent option of a newly constructed home.

According to a recent publication by the National Association of Realtors (NAR),

"Homebuyers are still facing a scarcity of housing choices during what is traditionally the busiest season in the real estate market. The current inventory of existing homes is approximately half of what it was in 2019. However, the market for new construction stands out as a promising area."

Let's examine an important indicator that demonstrates the significant increase in new home construction across the country. This metric is known as "new residential completions," which refers to newly constructed homes that have been fully finished and are available for occupancy.

The following graph utilizes data from the Census to illustrate the historical trend of new-home completions, showcasing the long-term average of finished housing units (depicted in black on the graph).

On the left side of the graph (depicted in orange), it is evident that leading up to the housing crash, builders surpassed the aforementioned average. This led to an excessive supply of homes in the market, resulting in a decline in home values. This oversupply was one of the contributing factors to the housing crash experienced in 2008.

Subsequently, the level of new home construction declined, and builders failed to construct an adequate number of homes to align with the historical average (represented in red). This insufficient construction resulted in a prolonged inventory shortage within the housing market. This deficit contributes to the current low inventory levels we are experiencing.

However, there is positive news to share. The green portion on the right side indicates that, according to the most recent report from the Census, builders are currently meeting the long-term average. This signifies that they are introducing a greater number of newly constructed homes to the market than they have in recent years.

Additionally, there is increasing momentum in residential starts and permits. Residential starts refer to homes where construction has officially commenced, while permits indicate homes where builders have plans to begin construction soon. With the rise in both starts and permits, it is a clear indication that more newly built homes will be available in the near future.

What This Means for You

The increased number of newly constructed homes in different stages of the construction process expands your range of choices. If you're currently seeking to move and time is a crucial factor, it is advisable to contact a local real estate professional who can assist you in exploring recently completed homes in your area. If construction on these homes is complete, you can expect a swift transition into your new home.

However, if you have the flexibility to wait and the prospect of customizing a home from scratch appeals to you, consider discussing with the same agent the properties in your area that are currently under construction. By purchasing a home that is still in progress, you have the opportunity to select the features and finishes as the construction unfolds. When none of the homes you have previously viewed meet your preferences, the ability to personalize a home according to your taste may be the ideal choice.

Regardless of the path you choose, having a reliable real estate agent by your side is essential. They possess in-depth knowledge of the available options in your area and can tailor their recommendations to align with your specific requirements, preferred neighborhoods, and other factors that are important to you.

Bottom Line

If you're experiencing difficulties in finding a home that meets your preferences due to the limited inventory, it might be worthwhile to explore the option of new-home construction. To initiate this discussion, it is recommended to contact a trusted local real estate professional who possesses expertise in the current offerings within your area. They can guide you through the process and provide valuable insights on available options.