New Challenges For New Home Construction

The housing market began with a bang in 2021 but with the demand for new homes came some uncertain challenges. Builder's confidence is strong with such buyer's high demand. The shortage in home inventory and low mortgage rates coupled with buyer's high interest and a new generation of buyers hitting their peak home-buying years makes for a great time for new home construction.

Zillow reported in their New Construction Consumer Housing Trends Report 2020 that 40% of those buyers who purchased a new construction build, were only interested in buying a new construction home. On the negative side, these new construction buyers hit more obstacles this year than in the past.

Close to half (45%) new construction buyers are under 40 years of age and 70% of new construction home buyers are first-time home purchasers. This shift in demographics has changed what a first-time home buyer might find challenging and what this demographic might struggle with.

This young generation struggled with several top challenges during the purchasing process. A fair price for a home seems to be a challenge. It was sighted that 30% of new construction buyers found that determining a fair price for a home was hard in 2019 and this rose to 37% in 2020. Many blame COVID-19 for this reason. The transaction of coordinating the build of a new home with the sale of their current home was also hard to handle for 36% of new construction home buyers.

The relationship between the sales agent and the home builder has become extremely important. In 2019 84% of new construction home buyers relied on their sales agent to communicate with the builder. In 2020 this rose to 90% which was a 17 point increase over last year.

Challenges can be overcome with help from a Realtor. A Realtor can help a buyer with pricing and financing. They can also be a great mediator between the buyer and home builder. A professional sales agent will help both the building process and purchasing process become an easy streamlined process.

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A Positive Outlook From Home Buyers

The economy might be in questionable times right now, but home buyers across the country are having a positive outlook on their home search. According to the recent Housing Trends Report (HTR), ” the share of prospective home buyers expecting their house search to get easier in the months ahead rose to 25% in the first quarter of 2020, up from 16% and 22%, respectively, in the first quarters of 2018 and 2019.”  This has been the third consecutive year-over-year increase in the share of buyers that anticipate more housing inventory.

The Housing Trends Report (HTR) is created by the NAHB Economics team. Their goal is to measure prospective home buyers’ impressions regarding the availability and affordability of homes for sale in the current market. The report is done quarterly and asses the changes in a buyer’s perception over time.

The HTR breaks down its findings by generation. They found that Gen X buyers were among the highest that felt the housing availability will improve while the Boomers were the lowest. The breakdown by generation of buyers expecting their house search to get easier was Gen X at 27%, Millennials at 26%, Gen Z at 22% and Boomers on the bottom at 20%.

Across the country’s regions, the report finds that 20% to 27% feel that their home search will become easier during the following months. The West came in with the highest percentage at 27%, followed by the Northeast and South at 25% and the Midwest came in last at 20%.

Not only do share buyers believe that the numbers will improve but they are reporting that they actually see more houses out there that they like and can afford. The first quarter of 2020 reported 31% compared to the first quarter of 2019 at 30%.

The report shows the breakdown by generations and regions. The highest generation found was Millennials and the highest region was the West. The breakdown for generations came in at 34% Millennials, 32% Gen Z, 29% Gen X and 24% Boomers. For regions, the West was 33%, the South came in at 32%, the Northeast at 30% and the Midwest last at 25%.

This is good news for the moral of the current housing market. Now is a great time to purchase a new home.

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