You might have noticed an increase in the availability of the Triangle area’s new construction homes on the market today. In fact, roughly one out of every three homes listed for sale is a new construction. If you’re curious about what this means for the Raleigh real estate market and your own housing plans, here’s what you need to know.
Why This Isn’t Like 2008
The 2008 housing market crash is still a key memory for many because it was partly caused by having too many homes available, including new construction homes. This past event makes some people uneasy when they notice an increase in new home construction today.
However, the current growth in new construction homes isn’t about overbuilding; it’s more about catching up after years of not building enough homes.
The graph below, sourced from Census data, illustrates the number of new construction homes built over the past 52 years. Post-2008, there was a significant period marked by underbuilding (highlighted in red). It’s only recently that construction has reached the long-term average annual building rates.
This graph demonstrates that the recent increase in new construction homes does not imply an imminent oversupply in the market. There’s a substantial backlog to address following more than a decade of underbuilding. And if you’re still worried builders are overdoing it, here’s something else that should be reassuring.
New Construction Homes May Be at Its Peak for the Year
Recent Census data on housing starts (where construction has started) and permits (where construction is approved to start soon) indicate a slowdown in the pace of new home construction. This adjustment is largely in response to the current high mortgage rates impacting buyer demand. Homebuilders are strategically reducing their activity to align with market conditions, as reported 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.”
Builders remember what happened when they overbuilt in the crash, and they’re looking to avoid a repeat of that. So, they’re being mindful and pulling back a bit.
You May Have More Options Now Versus Later
For those considering purchasing a new construction home in the Triangle area, the timing could be advantageous. With the number of new constructions peaking and the pace expected to slow, a larger selection of new homes is likely available now than will be later this year. Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), has stated:
Given the recent declines in housing starts, home completions will steadily show declines in about six months.”
So, if you’re in a position to buy, you might find a broader array of new construction homes available now compared to the near future.
Working with a knowledgeable local real estate, such as Linda Craft Team Realtors is crucial throughout your Raleigh home-buying journey. We can provide valuable insights into the reputations of Triangle area builders and other specifics relevant to our local market. If new constructions are scarce in your area, we can also guide you to nearby regions with more options.
Bottom Line
The increased share of new construction homes in the Triangle area today should be seen as a positive development. Homebuilders are not overbuilding; they are merely responding to market needs and aiming to prevent past mistakes from 2008.
If you’re looking to purchase while new construction home options are abundant, contact Linda Craft Team Realtors to explore your opportunities.