Housing forecast

In years past, house hunting could be a fun, relaxed time. Buyers could afford to take their time and see multiple listings before making a decision. There were plenty of homes to choose from.

However, the housing market has not been kind to buyers in the last several years. One reason for this that we keep writing about is the housing shortage.

It's especially frustrating for first-time home buyers who are competing with so many others for the few starter homes on the market. And starter home prices are also rising.

You may have heard that new home construction is returning. That is true. More new homes are being built now than there have been since before the 2008 and the beginning of the recession.

Read on to learn about what's trending and how it could impact you as you continue your search!

New Homes Statistics in 2018

In May of this year, builders completed almost 1.3 million new homes across the U.S. according to the
joint report put out by the U.S. Census Bureau and the U.S. Department of Housing and Urban Development.

The last time that many houses were completed in a month was in January of 2018 when a little over 1.3 million new homes were completed.

There were also more new homes completed this year compared with this time last year. In April, 1.9% more new homes were completed than in April of 2017. In May it was even better: 10.4% up from May of 2017.

Future prospects for new homes and new home buyers also looks good. This trend can be traced through how many permits have been issued. The number of new permits issued to home builders was up 8% in May over May of 2017, so more new homes are being built this summer than last summer.

In addition, there are permits to put up single-family houses, which is good for new home buyers as well. Permits for single-family homes went up 7.7% over last year. New construction has varied from region to region, but the Midwest has seen one of the most substantial bumps - 17.4% - in permits issued to builders.

One of the most significant gains is in housing starts. Construction work on new homes that has begun but hasn't finished yet has gone up 20.3% from the same time last year. The Midwest overall has seen the biggest gain in new construction, which continues to make it one of the most affordable regions in the country.

The Downsides to New Construction

Although this region has seen the most growth, there still aren't enough new homes being constructed to meet all the demand. More new homes do help the struggling buyers. However, it's always going to be competitive. The market needs 1.25 million new homes every year to meet demand, but this current building pace doesn't match that. It's about 30% below the required supply.

Another potential frustration is in the types of homes being built. Demand is highest for single-family starter homes, as there is an increasing number of first-time buyers. New homes are more expensive than previously existing homes because of the associated costs.

Additionally, builders are erecting larger houses for clients with a higher income. Most of the new homes that have gone up have multiple bedrooms and bathrooms with a price-point to match.

Most new construction, as you can imagine, is happening further out from city centers and established suburbs. They are more likely to be part of a homeowners association, which can add more expense in the form of HOA fees. This is all good news for families looking for this type of new building, but it doesn't help young buyers looking for the right home not too far away.

Takeaway

New home construction is excellent news for the housing market overall. Even if you are a first-time buyer, it could end up impacting you positively. The good news is the housing shortage is beginning to ease, if ever so slightly.

If you are interested in looking for a new house in the Northville, Novi, or South Lyon, Michigan area, please give us a call. We would be honored to help!

248-348-7200