New Construction Homes Required to Meet High Demand

Experts are calling on home builders to hasten their new construction homes, to assist with the low inventory of homes for sale in the in the housing market. For two months now, home sales have swelled, with July’s rate reaching its highest point since October of 2007.

The US Census Bureau and Department of Housing and Urban Development showed that July sales increased by 31.3% from this time last year and were 12.4% higher than last month with an adjusted rate of 654,000.

Svenja Gudell, Zillow Chief Economist was surprised by the increase, explaining:

“July(‘s) new home sales data was a surprise, but a welcome one. For years, the market has been practically begging builders to both ramp up their efforts overall and to put more focus on serving the less expensive end of the market. Today's data confirms both are happening in earnest.”

The National Association of Home Builder’s (NAHB) Chairman, Ed Brady, didn’t seem as surprised:

Ed Brady, Chairman of The National Association of Home Builder’s (NAHB) wasn’t so surprised and commented that:

“This rise in new home sales is consistent with our builders’ reports that market conditions have been improving. As existing home inventory remains flat, we should see more consumers turning to new construction.”

Robert Dietz, NAHB’s Chief Economist explained that this is a positive start for new construction homes and its sales if conditions remain the same going forward:
“July’s positive report shows there is a need for new single-family homes, buoyed by increased household formation, job gains and attractive mortgage rates. This uptick in demand should translate into increased housing production throughout 2016 and into next year.”

Bottom Line

New construction homes are in high demand, and it comes as no surprise with home sales hitting their highest mark in more than nine years. Because of the low inventory of existing homes, those homebuyers looking to purchase a property are turning to new construction homes to meet their needs.

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