More new homes on the way as construction activity rises
For home buyers across the country, particularly first time buyers and those shopping in lower to middle price tiers, the lack of inventory can be daunting. Fortunately, more new homes are slated to hit the market in the near future as home construction activity increases.
Builders secured 1.26 million new permits in March
With housing demand showing no sign of slowing down and not enough existing homes entering the market, builders are beginning to seize the opportunity by securing significantly more permits. According to the latest residential sales report jointly released by the U.S. Census Bureau and the U.S. Department of Housing and Urban Development (HUD), builders locked in about 1.26 million more permits in March to construct the nation’s sorely needed homes. This reflects a 3.6% increase in permits from February and a 17% increase from March 2016.
“It’s good news, confirming that new construction is continuing to rise,” says realtor.com’s senior economist, Joseph Kirchner. “That’s important, because it means it will help to relieve the nation’s housing shortage.”
Permits for condos up, single-family homes dip slightly
According to the Census/HUD data, condo buyers are likely to see more options hitting the market this summer and into the fall. Permits for buildings with five or more units increased 18.3% from February and 26.1% from March 2016, according to the report. These improvements have helped bring the level of construction in large, multi-unit buildings back up to where it has been in recent months.
Single-family home construction dipped slightly by 1.1% from February to March; however, single-family home construction is up 13.5% from the same period a year ago. This is great news for buyers, since single-family homes are the most in-demand, reports realtor.com.
The downside to all this new construction is that it’s not likely to help affordability. Newly constructed homes typically cost a lot more than existing or pre-owned homes.
According to the most recent U.S. Census/HUD data, the median price of a new home was $296,200 in February – nearly 30% higher than the price on existing homes. Of those new homes, nearly 820,000 were single-family residences.
Regionally, the South saw the most new homes finished in March at about 611,000. That’s up 6.6% from a month ago and 10.5% from March 2016.
Next in line is the West, with about 290,000 new homes.
The Midwest had about 191,000 new homes – up a staggering 52.8% from February and 12.4% from the same time the year before.
The region with the least amount of new homes completed was the Northeast, which is hindered by less available land to build on and therefore higher land prices.