July 17, 2023
If you’re in the process of looking for a home today, you likely know that the supply of homes for sale is low because you’re feeling the impact of having a limited pool of available options. And, if your biggest hurdle today is that you’re having trouble finding something you like, consider a newly built home as a great option.
In a recent article the National Association of Realtors (NAR) states:
“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 is a look at a key metric showing just how much new home construction is ramping up nationwide. It’s called new residential completions. Basically, completions are newly-built homes, completely finished and ready to be occupied.
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 you can see on the left (shown in orange), leading up to the housing crash, builders exceeded that average. The result was an oversupply of homes on the market, so home values declined. That was one of the factors that led to the housing crash back in 2008.
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 contributing to today’s extremely low inventory.
But, here’s the bright spot. 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 market than they have in recent memory.
And residential starts and permits are also gaining momentum. Starts are homes where the 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 on the horizon.
What This Means for You
More newly built homes in various stages of the construction process means the pool of options is growing. So, if you’re looking to move now and timing is important to you, reach out to a local real estate professional to explore the homes that were recently completed in your area. If construction is complete on those homes, you should likely be able to move in quickly.
But, if you can wait and find the idea of customizing a home from the ground up appealing, ask that same agent about the homes in your area that are in the process of being built. If you buy a home that’s still in the works, you might be able to pick the features and finishes along the way. Moreover, when none of the homes you’ve looked at so far are to your liking, being able to tailor one to your taste may be your best option.
Either way, a trusted real estate agent is a crucial part of the process. They’ll know exactly what’s available in your area and can base their recommendations on your unique needs, desired neighborhoods, and more.
Bottom Line
If you’re having trouble finding a home you like while inventory is so low, it may be time to consider looking into new-home construction. So, if you’d like to start that conversation, let’s connect so you’re working with an expert on what’s available in our area.