You may be considering only previously owned homes for your housing search. But because there are currently so few houses on the market, it is prudent to think about any and all housing possibilities, including a newly constructed house.
The Number of Newly Built Homes Is on the Rise
Even though there are more houses for sale now than there were at this time last year, the number of homes on the market is still very low. One reason for this is that for many years, not enough new homes have been built to keep up with demand.
The graph above shows how few new homes have been built over the past 14 years. But it also shows an important trend: each year, more and more new homes are being built. Chief Economist at First American, Mark Fleming, says this is good news for buyers:
“While existing-home inventory remains limited, the silver lining for home buyers is that new-home inventory is on the rise, and a new home at the right price is a pretty good substitute.”
Builder Incentives Can Provide a Boost
Even though the number of new homes for sale is going up, builders are slowing down until they sell more of what they already have. Logan Mohtashami, who is the Lead Analyst at HousingWire, says:
“The builders need to get rid of the backlog of homes, but instead of mortgage rates between 3% and 4%, they now have to deal with rates of 6% or more. This means they have to offer a lot of incentives to make sure those homes sell.”
Now, a lot of builders are giving buyers incentives to help them buy these homes. Also, Fleming says:
“According to the National Association of Home Builders, almost two-thirds of builders were offering incentives, such as lowering mortgage rates, paying buyers’ points, and lowering prices, to get people to buy their homes.”
If your builder is willing to pay to lower your mortgage rate, that could change everything. The economist at First American, Ksenia Potapov, says it this way:
“A one-point drop in mortgage interest rates has the same effect on
Should You Buy a Brand-New Home?
Consulting a reliable real estate expert who can help you analyze the benefits of each option is the best approach to decide what kind of home to purchase. They have an intimate knowledge of the homes on the market in your area and the builders who may be able to provide you with advantageous financial incentives.
There may not be many houses on the market right now, but new construction is on the rise and many builders are providing discounts to attract buyers. Consult a real estate professional in your area who is familiar with the market and can help you choose whether buying new or pre-owned is the better option.