Homebuilders Aren’t Overbuilding, They’re Catching Up

You may have heard that there are more brand-new homes available right now than the norm. Today, about one in three homes on the market are newly built. And if you’re wondering what that means for the housing market and for your own move, here’s what you need to know.

Why This Isn’t Like 2008

People remember what happened to the housing market back in 2008. And one of the factors that contributed to that crash was that there were too many homes for sale. While only part of the oversupply back then came from builders, the lasting impact is that some people still feel uneasy when they hear new home construction has ramped up.

Even though the supply of new homes has grown this year, the data shows there’s no need to worry. Builders aren’t overbuilding, they’re just catching up. 

The graph below uses data from the Census to show the number of new houses built over the last 52 years. Following the crash in 2008, there was a long period of underbuilding (shown in red). And it wasn’t until recently that we finally met the long-term average for how many homes are built in a typical year. No Caption Received

This shows, that even with the increase in new builds we’ve seen lately, there won’t suddenly be an oversupply of homes for sale. There’s too much of a gap to make up after over a decade of underbuilding. And if you’re still worried builders are overdoing it, here’s something else that should be reassuring. 

New Home Construction May Be at Its Peak for the Year

The latest data from the Census on housing starts (homes where builders just broke ground) and permits (homes where builders can start development soon) shows builders are slowing down their pace right now. Why is that?

They’re responding to still high mortgage rates and how those are impacting buyer demand. Basically, they’re pulling back appropriately in response to what’s happening in the market. As an article from HousingWire explains

“Even with a massive housing shortage across the nation, homebuilders are completing their pipelines and not seeking as many permits to construct new single-family houses.” 

Builders remember what happened when they overbuilt in the crash, and they’re looking to avoid a repeat of that. So, they’re being mindful and pulling back a bit.

You May Have More Options Now Versus Later

If you’re considering a newly built home, here’s how this impacts you. With builders seeking fewer permits and not breaking ground on as many new homes, we may be at the peak of new home construction for the year. This doesn’t mean new home construction is screeching to a stop – just that the pace is slowing down now, and that’ll impact what comes to market later this year. As Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), says:

“Given the recent declines in housing starts, home completions will steadily show declines in about six months.”

So, if you’re ready and able to buy now, you may find you’ll have more newly built options to choose from now versus later on. This may be enough reason to kick off your search.

Just be sure to work with a local real estate agent you know and trust throughout the process. An agent will have valuable insight into builder reputations and other key factors specific to your market. And if there isn’t much new construction near you, they’ll be able to point you toward a nearby area where there is.

Bottom Line

While it’s true new home construction is a bigger segment of the market than the norm, that’s not a bad thing. Builders aren’t overbuilding, and they’re responding to market signals to avoid repeating the mistakes that were made in 2008.

 

If you want to buy now while new home options may be at their peak, let’s connect.

73 Properties
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Open 7/21
17594 Vellum CIRCLE Punta Gorda,  FL 33955
$549,900
Neighborhood: Punta Gorda Isles Sec 21
3
Beds
2F21/2
Baths
2,223
Sq.Ft.
2023
Year Built
6
Days on Site
C7494811
MLS
$974,900
Neighborhood: South Bayview Estates
3
Beds
2F11/2
Baths
2,699
Sq.Ft.
2002
Year Built
8
Days on Site
C7495222
MLS
$2,100,000
Neighborhood: Venezia Park Rep
4
Beds
4
Baths
4,570
Sq.Ft.
1958
Year Built
8
Days on Site
N6133767
MLS
$529,900
Neighborhood: Port Charlotte Sub 22
4
Beds
3
Baths
2,549
Sq.Ft.
1995
Year Built
9
Days on Site
C7495103
MLS
$525,000
Neighborhood: Hrbr Heights
2
Beds
2
Baths
1,156
Sq.Ft.
1977
Year Built
10
Days on Site
C7495029
MLS
Open 7/20
1583 Hyssop LOOP North Port,  FL 34289
$540,000
Neighborhood: Cypress Falls
3
Beds
2
Baths
1,997
Sq.Ft.
2019
Year Built
13
Days on Site
C7494406
MLS
$520,000
Neighborhood: Gran Paradiso Ph 1
4
Beds
3
Baths
2,025
Sq.Ft.
2014
Year Built
16
Days on Site
C7494672
MLS
$725,000
Neighborhood: Lido Towers
2
Beds
2F11/2
Baths
1,367
Sq.Ft.
1980
Year Built
16
Days on Site
C7494344
MLS
$500,000
Neighborhood: North Port Charlotte Country Club
3
Beds
2
Baths
1,788
Sq.Ft.
1993
Year Built
17
Days on Site
C7494821
MLS
$1,200,000
Neighborhood: Punta Gorda Isles Sec 12
3
Beds
2
Baths
2,180
Sq.Ft.
2014
Year Built
18
Days on Site
C7494377
MLS
$599,900
Neighborhood: Golden Gate Un 02
4
Beds
3
Baths
2,513
Sq.Ft.
2002
Year Built
24
Days on Site
D6137110
MLS
Open 7/20
27072 Ecuador Dr Punta Gorda,  FL 33983
$553,900
Neighborhood: Punta Gorda Isles Sec 20
3
Beds
3
Baths
2,120
Sq.Ft.
1990
Year Built
29
Days on Site
C7494304
MLS

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