High interest rates, pricey homes, and a shortage of available houses are making things very difficult for homebuyers, but new construction homes could be the solution.
America has had a housing shortage for years. Robert Dietz, the National Association of Home Builders’ Chief Economist, says there are about half as many homes on the market as there should be.
“Finding that inventory is a real challenge, and that’s where new construction can play a role,” said Dietz.
Dietz says 32 percent of the total housing inventory are newly built homes, and historically it’s around 12 percent. He says incoming census data reflects a rise in single-family home construction so far this year, and he expects that trend to continue.
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“While housing is weaker than it was during the post-COVID housing boom, builders do expect to be building more homes as we enter into the second half of 2023.” said Dietz.
Ashley Wisch has been in the real estate business since 2013, and became a realtor in the Memphis, TN-area in 2018.
“When we hit 2020, everybody’s houses were for sale and interest rates were at 2%. Everybody was buying, everybody was selling…so now we’re seeing the inventory is really low,” says Wisch.
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She’s seen a boom of new home construction in the state with everything from custom-built homes to “spec homes”, and she says buyers are ready.
“What we’re seeing in the greater Memphis area like our suburbs…all the little cities are creating more demand for new construction because the land is more obtainable, it’s affordable,” Wish says. “It doesn’t really matter the price point because you’re seeing multiple offers on a million plus and 500 and under. So there’s really no sweet spot,” she said.
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The housing shortage is partially because of high interest rates. Potential sellers don’t want to be forced to lower the asking price and to buy a new home with a higher interest or mortgage rate.
“No one is selling. I think the new construction that’s happening now is going to benefit our market over the next two to three years.” says Wisch.
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Government data shows median home prices spiked in 2022, to nearly $480,000, but they’ve since dropped by about $60,000. New construction could help bring down prices even more.