Momentum Is Building for New Home Construction

<article class="post-739096 post type-post status-publish format-standard has-post-thumbnail hentry" id="post-739096"><span class="entry-date">July 11, 2023</span><div class="entry-header center-block text-center"><h1 class="entry-title">Momentum Is Building for New Home Construction</h1><div class="shareBlock"><div class="shareTitle">Share</div><div class="shareIcons"><a aria-label="Twitter Share Link" class="twitter solid display-inline-block" data-tracking="Post,Social Post Link Clicked,Twitter" href="http://twitter.com/share?text=Momentum+Is+Building+for+New+Home+Construction&amp;url=https%3A%2F%2Fgilliggroup.com%2Fblog%2Fmomentum-is-building-for-new-home-construction%2F" target="_blank"><span class="force-hidden">Twitter</span></a>
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</div></div><div class="post-tax post-category"><span></span><a href="../category/realtor-blog/index.html" rel="tag">Realtor Blog</a></div><div class="post-tax post-post_tag"></div></div><div class="entry-content"><div><img alt="Momentum Is Building for New Home Construction Simplifying The Market" decoding="async" loading="lazy" src="https://media.agentaprd.com/sites/222/20230707-momentum-is-building-for-new-home-construction.webp" style="display: block; margin-bottom: 5px; clear: both; max-width: 100%;" width="358"/>
<p>If you’re in the process of looking for a home today, you know the <a href="https://www.simplifyingthemarket.com/2023/07/06/todays-housing-inventory-is-a-sweet-spot-for-sellers/?a=712984-fa409495d5d70154d03a25e81e9540e2" rel="noopener noreferrer" style="color: blue;" target="_blank">supply of homes</a> for sale is low because you’re feeling the impact of having a limited pool of options. And, if your biggest hurdle right now is that you’re having trouble finding something you like, don’t forget that a newly built home is a great option.</p>
<p>As a recent article from the <em>National Association of Realtors</em> (NAR) <a href="https://www.nar.realtor/magazine/real-estate-news/contract-signings-slow-but-buyer-demand-is-still-high" rel="noopener noreferrer" style="color: blue;" target="_blank">says</a>: </p>
<blockquote><p><em>“</em><strong><em>Home buyers continue to be met with limited housing options </em></strong><em>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 . . . </em><strong><em>Meanwhile, the market for new construction is a bright spot</em></strong><em>.”</em></p></blockquote>
<p>Here’s a look at a key metric that shows just how much new home construction is ramping up nationwide. It’s called <strong>new residential completions</strong>. Basically, <strong>completions</strong> are newly built homes that are finished and ready to move into.</p>
<p>The graph below uses <a href="https://www.census.gov/construction/nrc/current/index.html" rel="noopener noreferrer" style="color: blue;" target="_blank">data</a> from the <em>Census</em> to show the trend of new-home completions over time, including the long-term average for the number of finished housing units (<em>shown in black on the graph</em>):</p>
<p><a href="https://www.simplifyingthemarket.com/content/images/20230707/20230711-new-residential-completions-increase.png?a=712984-fa409495d5d70154d03a25e81e9540e2" rel="noopener noreferrer" target="_blank"><img decoding="async" src="https://files.keepingcurrentmatters.com/content/images/20230707/20230711-new-residential-completions-increase.png"/></a></p>
<p>As you can see on the left (<em>shown in orange</em>), leading up to the housing crash, builders exceeded that average. The result was an oversupply of homes on the market, so <a href="https://www.simplifyingthemarket.com/2023/06/12/are-home-prices-going-up-or-down-that-depends/?a=712984-fa409495d5d70154d03a25e81e9540e2" rel="noopener noreferrer" style="color: blue;" target="_blank">home values</a> declined. That was one of the factors that led to the housing crash back in 2008.</p>
<p>Since then, the level of new home construction has fallen off, and builders haven’t built enough homes to meet the historical average (<em>shown in red</em>). That underbuilding left the housing market with a multi-year inventory deficit. And, that deficit is part of what makes inventory so low right now.</p>
<p>But, here’s the good news. The green on the right shows that according to the <a href="https://www.census.gov/construction/nrc/current/index.html" rel="noopener noreferrer" style="color: blue;" target="_blank">latest report</a> from the <em>Census</em>, builders are matching the long-term average right now. And that means they’re bringing more newly built homes to the market than they have in recent memory.</p>
<p>And residential starts and permits are also gaining momentum. <strong>Starts</strong> are homes where the construction has officially kicked off. <strong>Permits</strong> 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 coming soon.</p>
<h4><strong>What This Means for You</strong></h4>
<p>More newly built homes in various stages of the construction process means your pool of options just got bigger. If you’re looking to move right now and timing is important to you, reach out to a local<a href="https://www.simplifyingthemarket.com/2023/05/22/why-buyers-need-an-expert-agent-by-their-side/?a=712984-fa409495d5d70154d03a25e81e9540e2" rel="noopener noreferrer" style="color: blue;" target="_blank"> real estate professional</a> to explore the homes that were recently completed in your area. If construction is done on those homes, you should be able to move in quickly.</p>
<p>But, if you can wait a bit and the idea of customizing a home from the ground up appeals to you, 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 can help pick the features and finishings along the way. And 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.</p>
<p>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.</p>
<h3>Bottom Line</h3>
<p>So, 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. If you’d like to start that conversation, reach out to a trusted local real estate professional who’s an expert on what’s available in your area.</p>
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