Newly Constructed Residences Poised to Make a Difference This Spring

Considering purchasing a home this spring? Chances are, you're facing the current affordability hurdles and contending with the scarcity of available properties for sale. However, what if there existed a solution that could alleviate both issues?

If you're encountering difficulties in finding a home that suits your preferences, and mortgage rates are squeezing your budget, it might be time to consider newly constructed homes. Here's why.

New Home Construction Is an Inventory Bright Spot

In the search for a home, the options typically include existing homes (previously owned and already built) and newly constructed properties. Despite a rise in the inventory of existing homes for sale this year, the supply remains lower compared to more standard market conditions seen in years such as 2018 or 2019.

Therefore, if you're aiming to broaden your range of choices further, considering newly constructed homes can be beneficial. As Danielle Hale, Chief Economist at Realtor.com, explains:

"The limited availability of existing homes on the market has expanded the opportunity for new-home construction to appeal to a broader range of buyers who may not have previously contemplated this option."

Fortunately, there's an abundance of newly constructed homes available for selection at the moment. The graphs below utilize Census data to illustrate the increasing trend of new home construction in two crucial areas (observe the latest surge highlighted in green):

Groundbreaking activities, marking the initiation of construction by builders, have notably increased recently. Moreover, the completion of homes, indicating those recently finished by builders, has also seen a significant uptick. As a result, whether you're in search of a newly constructed, move-in ready home or prefer the chance to engage early in the process and customize your build along the way, there is currently a greater array of options at your disposal.

Builders Are Offering Incentives To Help with Affordability

Construction Firms Provide Incentives to Enhance Affordability

Additionally, to enhance the deal, builders are providing incentives such as mortgage rate reductions and other advantages to homebuyers presently. This can assist in mitigating the affordability obstacles of today while also facilitating your acquisition of your ideal home. Mark Fleming, Chief Economist at First American, elaborates on why builders might be able to offer you more flexibility compared to the average homeowner:

"Builders aren't bound by fixed mortgage rates. Their aim is to sell homes because they don't reside in them. Holding onto unsold inventory incurs expenses. In their earnings calls, several publicly traded home builders have expressed their commitment to maintaining incentives, particularly mortgage rate buydowns. This commitment is expected to sustain a strong performance in the new-home market during the spring home-buying season."

An article from HousingWire also elaborates on the current incentives provided by builders.

"The utilization of sales incentives continues to exhibit momentum, with 60% of respondents stating their use, compared to 58% in February."

Keep in mind, purchasing from a builder differs from buying from a home seller, underscoring the importance of collaborating with a local real estate agent. Builder contracts can entail complexity, and a dependable agent will serve as your advocate throughout the process.

They will serve as your primary source of guidance regarding construction quality and the builder's reputation. Additionally, they will review and negotiate contracts to secure the best deal for you, assist you in determining which customizations and upgrades are most beneficial, and provide a range of other valuable services.

Bottom Line

If you're encountering difficulties in finding a home for purchase or grappling with today's affordability challenges, reach out to a local real estate agent to explore whether newly built homes might offer the solution you seek.