Home Building is on the rise! You need no further evidence than all of the housing starts you see as you drive through the Traesure Valley. All of the increased building activity has also sparked the interests of potential homeowners. This will continue to drive rising home prices and appreciation.
Tight housing inventory is leading homebuilders to build more homes. Single-family building permits increased 27% in the first quarter of 2013 compared to the first quarter of 2012, the highest increase since 2008.
This follows a long contraction in homebuilder business. At the height of the downturn, homes were so undervalued that they were selling for less than the cost of construction. This led new construction of homes to grind to a standstill for several years.
Consequently, inventory is at the lowest level in 12 years. While builders broke ground on 780,000 units last year — a 28% increase from the previous year — construction still needs to double just to keep pace with population growth and household formation.
Other factors are constricting inventory. There are fewer distressed homes on the market. Distressed homes accounted for 21% of sales during the first quarter of 2013 compared to 25% in the first quarter of 2012. Also, there’s the rising price conundrum: With home prices reaching their highest level in seven years, buyers are anxious to purchase while some sellers are holding out for higher prices.
“Builders are noting an increased sense of urgency among potential buyers as a result of thinning inventories of homes for sale, continuing affordable mortgage rates and strengthening local economies,” said National Association of Home Builders Chairman Rick Judson. “This is definitely an encouraging sign even amidst rising challenges with regard to the cost and availability of building materials, lots and labor.”
Despite challenges, the Housing Market Index (HMI) gauging expectations for future sales recently reached its highest level since February 2007.
Prospect is an experienced new construction lender, offering a full suite of products and features for your buyers. Most importantly, we offer 4-, 6- and 9-month extended rate locks that let buyers lock in at today’s rate while the home is being built. Extended rate locks provide homebuyers with piece of mind, mitigate affordability issues if rates go up, and reduce pipeline fallout for builders and real estate agents. We also provide a wide array of financing programs, including Conventional, FHA, VA and Jumbo loans.
Contact me to learn more about our Extended Rate Lock Program — and the many other products and services that can help you sell more homes — available through our New Construction Platform.