Housing Market Slowing Down? Don’t Tell Builders!

Many experts have been calling upon home builders to ramp up construction to help with the lack of existing inventory for sale. For the past two months, new home sales have surged, with July’s total coming in at the highest since October 2007.

The latest estimates from the US Census Bureau and Department of Housing and Urban Development show that sales in July were 31.3% higher than this time last year, and 12.4% higher than last month, at a seasonally adjusted annual rate of 654,000. 

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Zillow’s Chief Economist, Svenja Gudell, echoed the reaction of some as she commented:

“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:

“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.”

NAHB’s Chief Economist, Robert Dietz, believes this is just the start for new home sales if market conditions continue:

“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.”

The existing home sales numbers for July will be released today and will shed more light on the overall health of the housing market.

Broward County New Construction Update

While many of the builders are building high rise condos averaging over $1M each unit, there are a few builders here making homes under that price range. The challenge is the most demand is under $300,000 and there are barely any new homes under that price range. New construction pretty much stopped after the last real estate bubble. Many builders went out of business and the ones who stayed waited to start producing new properties. Well the demand to buy has been higher and the new construction is lacking in the first-time home buyer market where it's needed the most.

Bottom Line

New home sales hit their highest mark in over 9 years. Buyers are out in force to find a home that fits their needs. Many are turning to new construction, as the inventory of existing homes has not been able to keep up with demand.

If you are in the market to buy a home whether it's new construction or not, contact Jay Cermak Top Fort Lauderdale Real Estate Agent at 954.235.3589 and schedule a FREE Real Estate Consultation today. Using an agent to buy a home costs you nothing, now isn't that great!