Buyers Turning to New Homes Due to Low Existing Home Inventory
June 02, 2023 from Floor Focus FloorDaily News
Washington, DC, June 2, 2023 – More Americans are turning to new home construction as existing inventory remains low and mortgage rates begin to stabilize, reports the National Association of Home Builders (NAHB). Sales of newly built, single-family homes increased in April, reaching the highest level since March 2022.
“Buyers are purchasing new homes so they can start investing in homeownership now instead of waiting for an existing home to come on the market,” said NAHB chairman Alicia Huey, a custom home builder and developer from Birmingham, Ala. “Builders want to meet buyer demand; however, high construction costs and labor shortages remain persistent challenges for the residential construction industry.”
Limited existing inventory has placed a renewed emphasis on new construction. In addition, new home construction is taking on an increased role in the marketplace because many homeowners with loans well below current mortgage rates are electing to stay put. Current interest rates have more than doubled from 2021. As a result, the supply of existing homes is incredibly low.
With limited available housing inventory, new construction will continue to be a significant part of prospective buyers’ searches in the quarters ahead.
This housing environment is fueling cautious optimism among builders; however, they continue to face challenges in meeting the demand for new construction. Residential construction obstacles include shortages of distribution transformers, other building materials and tightening credit conditions for residential real estate development and construction brought on by the actions of the Federal Reserve to raise interest rates.