Photo: James Bombales
Facing a dearth of inventory for existing homes, US buyers are snatching up newly constructed homes at breakneck speed. A new report by John Burns Real Estate Consulting suggests that new home sales surged 55 percent year-over-year in June, an increase not seen since the height of the housing bubble in 2005.
While the US Census Bureau’s monthly new residential sales data won’t be released until next week, this report is regarded as a reliable indicator of where the market stands, accounting for roughly 21 percent of all new home inventory nationwide.
Authors Lesley Deutch and Ken Perlman painted a picture of the “new American homebuyer,” highlighting their common characteristics. According to their findings, pandemic-era home shoppers are increasingly looking to the suburbs, enticed by larger living spaces and historically low mortgage rates.
An estimated 1.12 million 23- to 30-year-olds have moved back in with their parents since February, a 115 percent jump in just four months’ time. These now multi-generational households may decide to seek out more square footage, heightening demand even further.
Anecdotal evidence from builders indicates that today’s homebuyers are extremely motivated. “The most knowledgeable, tech-savvy, and pre-qualified buyers ever are making appointments and showing up ready to buy,” reads the report. “Traffic conversion rates are probably at an all-time high.”
Buyers are also growing impatient after spending so much time at home and browsing a limited number of for-sale listings. Last month, there were only 1.5 new units of unsold inventory for every new-build community analyzed by John Burns Real Estate Consulting. That’s a 20 percent decline compared to the same month a year ago.
The growing demand for housing is good news for developers — the volume of actively selling subdivisions is 5 percent lower than in June 2019 and property values are expected to rise if interest rates remain low and the economy stabilizes.
“The outlook for the home building industry remains unclear, as rising COVID rates and uncertainty around government stimulus may result in another leg down for the economy,” explains the report. “But we continue to see opportunities for home builders, land developers, and other industry participants despite the uncertainty.”