You might have noticed an increase in brand-new homes on the market lately, with roughly one in three homes being newly built. If you're curious about what this means for the housing market and your potential move, here's the scoop.

Why This Isn’t Like 2008

The 2008 housing crash left a lasting impression, partly due to an oversupply of homes. Although only a portion of that oversupply came from builders, it left many people wary of new home construction ramping up. However, the current situation is different. While new home supplies have increased this year, builders aren't overbuilding—they're catching up.

Historical data from the Census Bureau shows that following the 2008 crash, there was a prolonged period of underbuilding. It's only recently that the number of new homes built has met the long-term average. Even with the recent uptick in new builds, there's no imminent threat of an oversupply because we're still compensating for years of underbuilding.

New Home Construction May Be at Its Peak for the Year

Current data on housing starts (homes where construction has just begun) and permits (homes slated for future construction) indicate that builders are slowing their pace. This is a calculated response to high mortgage rates and their impact on buyer demand. Builders are being cautious to avoid the overbuilding mistakes of the past. As noted by HousingWire:

“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.”

This strategic pullback is reassuring for those worried about overbuilding.

More Options Now Than Later

If you're considering a newly built home, now might be an ideal time to buy. With fewer permits being issued and a slower pace of new construction, current inventory might be at its peak for the year. According to Lawrence Yun, Chief Economist at the National Association of Realtors (NAR):

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

This means you could have more options now compared to later in the year. To navigate this opportunity, it's crucial to work with a local real estate agent who has insights into builder reputations and market specifics. If new construction is scarce in your area, an agent can direct you to nearby locations with more options.

Bottom Line

The current surge in new home construction is not an indicator of overbuilding but rather a necessary step to catch up from years of underbuilding. Builders are responding wisely to market signals to prevent repeating the mistakes of 2008. If you're ready to explore new home options while availability is high, let's connect and start your search today.