One-Third of Homes for Sale Are Newly Built

If you're in the market for a home, there's a good chance you'll come across newly built properties. About 33.4% of single-family homes available for sale in the first quarter of this year were newly built, nearly double the pre-pandemic levels, according to a report by Redfin.

"It doesn't mean necessarily that new construction has ramped up," said Robert Dietz, chief economist of the National Association of Home Builders. Homebuilders are still constructing about 1 million single-family homes a year, he said. "What's happened is that the level of resale inventory has shrunk."

New Builds May Offer More Flexible Pricing

In a housing market plagued with low supply, buyers are increasingly turning to new construction because it offers more opportunities. Nicole Bachaud, senior economist at Zillow Group, recently told CNBC that builders are typically more flexible with pricing. Builders can offer incentives like rate buy-downs, price cuts, and covering closing costs.

Dietz noted that a little less than two-thirds of builders use some kind of incentive to promote sales, such as amenity upgrades, mortgage rate buy-downs, and limited price cuts. About a quarter of builders use price reductions, averaging around 5% to 6%.

The Price Gap Between Existing and New Homes

The median sales price for new houses sold in the U.S. in March was $430,700, according to data from the U.S. Census Bureau and the U.S. Department of Housing and Urban Development. While new builds still sell for slightly more than existing homes, the price gap has significantly narrowed.

"Prices are much closer to parity than during any point in the last three decades," said Matthew Walsh, assistant director and economist at Moody's Analytics.

Over the last six months, the median price for a new home has been only about 4% higher than the median price of an existing house. Before the pandemic, the median price of a new home was more than 40% higher than an existing house.

The low supply of existing homes has caused prices to rise dramatically, while prices for new builds tend to fluctuate based on interest rates, housing demand, competition for existing homes, and construction costs, Dietz explained.

What to Keep in Mind When Buying a Newly Built Home

If you decide to explore new construction, keep in mind that only about 10% of new homes available for sale are completed and move-in ready, according to Dietz. Most new homes range from empty lots ready to be built on to various stages of construction.

Today's buyer needs "to be strategic, patient, and flexible," said Dietz, suggesting that buyers consider different types of housing and locations and make thoughtful design decisions. Here are four things to pay attention to:

1. Consider a Smaller House: Since 2021, homebuilders have been constructing slightly smaller homes to address affordability issues. Reducing square footage can help lower construction, utility, and maintenance costs. Townhouses made up almost 18% of single-family housing starts in the first quarter of the year.

2. Be Open About Geographic Location: New construction can be more affordable in rural areas due to lower regulatory costs and greater land availability.

3. Keep Construction Costs Down: Major factors like lumber and labor costs impact the cost of a new house. Homeowners can control finishes added to the house. To save on costs, focus on completing structural elements and opt for basic or lower-cost features during construction.

4. Be Mindful of Future Costs: Allow room in your budget for costs that may change significantly after the first year, such as property taxes. Research how often your county reassesses property taxes and what the formula is based on.

Despite potential future costs, new homes often offer long-term savings. "When you're buying a newly built home, you're typically buying a home that's more resilient and more energy efficient," said Dietz, which can mean lower operating costs over time.

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Major Renovations Underway at St. Tammany Parish Tourist and Convention Commission Headquarters

Renovations to the St. Tammany Parish Tourist and Convention Commission headquarters on La. 59 near Mandeville began on May 6, marking the start of a $468,000 overhaul of the 27-year-old building.

Ashley Smith Construction of Covington is the project contractor, and Piazza Architecture Planning of Mandeville is the architect.

Donna O'Daniels, executive director of the commission, said the project will start with exterior work to avoid the peak summer heat. Interior renovations will follow, with some offices receiving only cosmetic updates such as new carpet and paint.

However, other offices will undergo significant changes. Mold had previously grown on ceilings, and wildlife had burrowed into the insulation beneath the building and into the crawl space above it. The building's HVAC system will also be replaced, and an additional restroom will be added.

The building, located between Interstate 12 and Koop Drive, serves as both a visitor center and office space for commission employees.

"The work is badly needed, so we're happy it's underway," O'Daniels said. "We may have to close the office to the public for a few days, but it should be very brief. As work progresses around the building, we can stagger days when staff work from home. We also have some space available to us at the Northshore Community Foundation in downtown Covington."

O'Daniels said the renovations are expected to be complete within three to five months.

"We're hoping by the fall," she said. "We're excited about it. We've already received many compliments on just the new sign that's been put up."

In recent years, the Tourist Commission building had become secluded, with mature tree limbs obstructing it from view. O'Daniels explained that while the building was designed to blend with the natural marshy habitat, it had become "almost invisible" due to overgrown trees.

"The trees then were nowhere near as mature as they are now," she said. "So, we had to cut back a bit within six feet of the building, mainly removing some low-hanging limbs which opened things up a little. You can see the exterior of the building now, and it's going to be getting some brighter colors."

"The whole project will give us better exposure," she added.

Last year, the Tourist and Convention Commission's board of directors allocated $1 million for extensive repairs, but they were pleasantly surprised earlier this year when the low bid came in at less than half that total. Ashley Smith Construction, who also built the current 3,137-square-foot visitor's center/commission headquarters completed in 1997, won the bid.

For more information on the St. Tammany Parish Tourist and Convention Commission, visit www.VisitTheNorthshore.com.

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Considering a Move? Here’s Why You Should Think About Newly Built Homes

When planning a move, it's normal to wonder where you'll end up and what your future home will look like. You might have a specific vision in mind, but unless you started out knowing you want a newly built home, you may not have considered new home construction. Here are two reasons you might want to reconsider:

1. Adding Newly Built Homes Could Give You More Options

There are two types of homes on the market: new and existing. A newly built home refers to a house that was just constructed or is under construction. An existing home is one a previous homeowner has lived in. Currently, the inventory of existing homes is tight, but there may be more options for you among new homes.

Data from the Census Bureau and the National Association of Realtors (NAR) shows that newly built homes make up a larger part of today's housing inventory than usual. From 1983 to 2019 (the last normal year in the market), newly built homes constituted only 13% of the total inventory of homes for sale. Today, that number has climbed to over 33%.

Rest assured, despite an increase in new construction, there's still a significant housing shortage overall. But for you, the uptick in new builds means more options in your home search.

2. Newly Built Homes May Be More Affordable Than You Think

You might wonder if a new build could really be an option for you, especially if you've previously dismissed them as too expensive. However, the price gap between newly built homes and existing homes is shrinking. Here's why.

Builders are responding to current market demands, focusing on constructing smaller, potentially more affordable homes.

"In the past, newly built homes have been much more expensive than existing homes, but that gap has been getting smaller recently. In some places today, the cost to build versus buy is roughly the same."

An article from CNBC supports this:

"While new builds are still sold for slightly more than existing homes, the price gap has significantly narrowed."

Moreover, some builders are offering price cuts and mortgage rate buy-downs to make new homes more attractive. There are many reasons why new builds may be worth considering today. As Freddie Mac notes:

"As the supply of existing homes for sale remains low and home prices continue to rise, more buyers are choosing to purchase new homes than in previous years."

However, buying a newly built home isn't the same as buying an existing one. Builder contracts come with different fine print. Partnering with a local real estate agent who knows the market, builder reputations, and contract details ensures you have an expert on your side.

If you want to find out what builders are doing in your area, connect with a real estate agent. If you're open to expanding your search to nearby towns, your agent can help you explore even more options.

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Green Building Practices: Building Sustainably

Builders were surveyed on how frequently they implemented seven categories of green building practices, whether the home was certified green or not. The leading practice in new homes was energy efficiency at 91%, followed by water efficiency at 52%, and healthier indoor living environments at 49%. For remodelers, the top three practices were energy efficiency (86%), healthier indoor living environments (51%), and water efficiency (49%).

Energy Efficiency

Energy efficiency was the most commonly used category. Builders reported on specific energy efficiency practices they used in more than 50% of homes. The top practices included the installation of green efficiency products, blower door testing, above-code energy programs, installing ducts in conditioned spaces, and targeting air leakages.

Renewable Energy

Builders were also asked about their use of renewable energy sources in more than 50% of their projects. Overall, renewables were not frequently used. Geothermal systems were the top renewable energy solution at 11%, followed by onsite solar energy at 10%. Regional differences were notable, with 31% of respondents from the West using solar energy systems, compared to 21% in the Northeast, and only 3% in the Midwest and South.

At the utility level, renewable energy use was more promising. Over half of the builders (55%) sized electrical panels to accommodate EV chargers, and 40% provided a charging outlet in more than half of their homes. Additionally, 25% of respondents built more than half of their homes to be all-electric, and nearly 19% designed all their homes for eventual all-electric use. There was no significant difference in the level of green engagement for all-electric homes.

Water Conservation

Water conservation was another top category for green building practices. The most common practice used in more than half of homes was installing water-conserving plumbing fixtures and faucets (87%). This was followed by water-conserving appliances (74%), tankless water heaters (65%), and efficient plumbing techniques (64%). Water conservation practices outside the home, such as drip irrigation, drought-tolerant landscaping, and rainwater collection and reuse, were used less frequently, with each below one-third.

Conserving Materials and Resources

Sustainable construction also involves conserving materials and resources. Builders were asked which material and resource conservation practices they used in more than 50% of their projects. Minimizing construction waste during design and construction was the most popular response at 78%, followed by using prefabricated components (such as panels and trusses) at 64%. Diverting construction waste from landfills was used less frequently at 35%.

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New Home Sales Rise in March Despite Higher Interest Rates

Despite higher interest rates last month, new home sales saw an unexpected rise in March due to limited inventory of existing homes. However, the pace of new home sales is expected to face pressure in April as mortgage rates have moved above 7% this month. This increase is anticipated to moderate sales and push builders to use more sales incentives this spring.

March Sales Performance

According to newly released data from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau, sales of newly built, single-family homes in March rose 8.8% to a seasonally adjusted annual rate of 693,000 units from a downwardly revised reading in February. This pace is up 8.3% compared to the same period last year.

"Although consumer demand has been somewhat dampened due to higher interest rates, builders continue to supply new homes to the market to lift inventory to make up for the low resale supply," said Carl Harris, chairman of the National Association of Home Builders (NAHB) and a custom home builder from Wichita, Kansas. "Rates moving above 7% however, will move some home buyers to the sidelines as the spring progresses."

The Impact of Higher Mortgage Rates

NAHB Chief Economist Robert Dietz emphasized the significance of increasing housing supply to address shelter inflation and lower interest rates. "Shelter inflation remains the largest, lingering obstacle to lower inflation. More housing supply will ultimately tame shelter inflation growth and lower interest rates. This will improve the cost of financing for land developers and home builders and enable more attainable housing supply."

Understanding New Home Sales

A new home sale occurs when a sales contract is signed or a deposit is accepted. The home can be in any stage of construction: not yet started, under construction, or completed. The March reading of 693,000 units represents the number of homes that would sell if this pace continued for the next 12 months, adjusted for seasonal effects.

Inventory and Prices

In March, new single-family home inventory remained elevated at 477,000 units, up 2.6% from February. This represents an 8.3 months' supply at the current building pace, supported by the ongoing shortage of resale homes. In contrast, data from the National Association of Realtors indicate just a 3.1 months' supply of existing single-family homes in March, with a balanced market typically having a 5 to 6 months' supply. The inventory of newly built single-family homes is up 10.2% year-over-year.

The median new home sale price in March was $430,700, up nearly 6% from February, though down 1.9% compared to a year ago.

Regional Performance

Regionally, new home sales on a year-to-date basis show varied performance across the country:
- Northeast: Up 15.1%
- Midwest: Up 17.8%
- West: Up 28.1%
- South: Down 6.6%

While new home sales experienced a boost in March, the rise in mortgage rates to above 7% in April is likely to temper this growth. Builders are expected to increasingly offer sales incentives to attract buyers amidst affordability challenges. The continued efforts to increase housing supply will be crucial in addressing shelter inflation and stabilizing the market for both homebuyers and builders.

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Revitalizing Old Mandeville: North Star Theatre Reopens After a Decade

The cozy North Star Theatre in Old Mandeville has been dark for more than a decade, long enough for its owner to be hazy on the name of the last production it hosted. But that is about to change in just five weeks when the house lights dim once again for a troupe of actors starring in a local production of "Chicago."

A New Era for the North Star Theatre

Starting on May 30, the theater's reopening is set to breathe new life into the North Star Theatre. This event will also highlight the older building connected to it, which has been meticulously renovated over the past four years.

A hotel dating back to the 1920s, this building at the corner of Girod and Madison streets in Old Mandeville has undergone an extensive renovation led by Jill McGuire, who is also a councilwoman in Mandeville. The project, which cost over $2 million, has transformed the 96-year-old Allenton Hotel building into the North Star Cultural Arts Center.

Seeking Artistic Tenants

Jill McGuire hopes to attract galleries or other art-centered tenants to complement the theater, which is attached by a walkway through a wide hall suitable for exhibitions. McGuire envisions events where audiences can enjoy a reception in the open space on the first floor before moving into the theater for a show.

"Think about an event here, a reception, where the audience would then flow into the theater for the show," said McGuire, as she showed off the 3,400 square feet of open space on the first floor of the two-story building. "At least that's the dream, right?"

Historical Transformation

The main building dates to 1927, originally opening on New Year's Eve as the Allenton Hotel. Built by E.J. Allen, the hotel was intended to serve passengers on a rail line that was planned to run along Girod Street. Although the rail line never materialized, the hotel managed to survive through the late 1950s, primarily accommodating workers constructing the Causeway Bridge.

Over the decades, the hotel closed, and in the late 1970s, the first floor housed several small businesses and was dubbed the "Small Mall." The building's wooden exterior was eventually covered in drab vinyl siding.

Restoration Challenges and Triumphs

Jill McGuire and her former husband, Barrett McGuire, purchased the complex in 2020 and embarked on the renovation, with Barrett conducting much of the research to match the original materials used in the hotel's construction.

"This place has had a lot of lives. Now it has another one," Jill McGuire said. She added that the building is rumored to have been a brothel at one time and that it is still haunted, though she hasn't seen any ghosts herself.

The renovation faced significant challenges, including delays caused by the pandemic and Hurricane Ida, which damaged the foundation and increased the cost of building supplies. Much of the original pine siding had to be replaced with custom-made boards from Gulfport, Mississippi, colored rust-red to match old photographs.

"It seems like everything just takes longer," McGuire said. "But the bones were really good."

Community Excitement and Future Plans

Local resident Nancy Clark, who has compiled histories of numerous old buildings in the area, praised the renovation. "The exterior is absolutely beautiful," Clark said. "I have high hopes for it."

While McGuire dreams of the building being filled with artsy types, most interest so far has come from prospective renters seeking small office space. "We'll just have to see what happens," she said.

Showtime at the North Star Theatre

One certainty is the reopening of the theater. Built in the late 1980s, the auditorium seats around 100 and previously hosted a regular season of shows. This tradition is set to return with the production company Evangeline Theater Co. handling the shows. "Chicago" will run for eight performances, and McGuire said more productions will follow.

"We're going to have a regular season," she said. "I hear a lot about it. I think people are really excited."

The revitalization of the North Star Theatre and the Allenton Hotel building marks a significant milestone for Old Mandeville, promising to bring cultural enrichment and community engagement back to the heart of the town.

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Considering Buying a Home This Spring? Explore the Benefits of New Home Construction

If you're planning to buy a home this spring, you're likely facing the dual challenges of affordability and limited inventory. However, there might be a solution that addresses both issues: newly built homes. Here's why you should consider this option.

New Home Construction: An Inventory Bright Spot

When searching for a home, you have two main choices: existing homes (those already built and previously owned) and newly constructed ones. Despite a slight increase in the number of existing homes for sale this year, the inventory is still lower than in more typical years like 2018 or 2019. If you're looking to expand your options, newly built homes can provide a viable alternative. Danielle Hale, Chief Economist at Realtor.com, notes:

"The shortage of existing homes for sale has opened up the possibility of new-home construction to more buyers who may not have once considered it."

The good news is that there are currently more newly built homes available. Recent data from the Census Bureau shows a significant increase in both housing starts (homes where construction has just begun) and completions (homes that builders have just finished). This means you have a broader range of options, whether you want a move-in ready home or prefer to customize a build from the ground up.

Builders Are Offering Incentives to Help with Affordability

To make new homes more attractive, builders are offering various incentives, such as mortgage rate buy-downs and other perks for homebuyers. These incentives can help mitigate today's affordability challenges and get you into your dream home. Mark Fleming, Chief Economist at First American, explains:

"Builders aren't rate locked-in. They would love to sell you the home because they're not living in it. It costs money not to sell the home. And many of the public home builders have said in their earnings calls that they are not going to be pulling back on incentives, especially the mortgage rate buy-down, so that will help the new-home market continue to perform well in the spring home-buying season."

An article from HousingWire also highlights the trend:

". . . the use of sales incentives still shows some momentum as 60% of respondents reported using them, up from 58% in February."

Partner with a Real Estate Agent

Buying from a builder is different from buying from a homeowner, and it's crucial to partner with a local real estate agent who can guide you through the process. Builder contracts can be complex, and a trusted agent will advocate for you at every step. They'll provide valuable insights on construction quality and builder reputation, help you review and negotiate contracts, advise on worthwhile customizations and upgrades, and much more.

If you're struggling to find a home due to today's affordability challenges and limited inventory, consider newly built homes. They might be the solution you need. Connect with a local real estate agent to explore this option and see how it can benefit your home-buying journey.

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