House building has been in a record low for years, but now builders are beginning construction on lots purchased during the recession. Construction is now helping to boost low inventory levels, and is increasing buyer interest in numerous markets.
During the last 12 months there were more than 1 million residential housing permits issued. More than developers are re-entering the market, and it's expected that new household formation coupled with pent-up demand for homes will help stimulate the construction industry for many years to come. The article in RISMedia goes on to outline some of the current trends in the new homes market.
Apparently most homebuyers would prefer to purchase a brand-new home. There have been several surveys that have shown the majority of active homebuyers are only looking for a brand-new home, or are shopping for new homes alongside existing homes. This shows that new home sales are an essential part of the real estate market today, but not so many sales associates have the necessary knowledge and training, as well as builder relationships to support buyers search for a new property. Those sales associates who have the opportunity to undertake this training may well find they have an edge over others who have not had this advantage.
Larger builders are also playing a more significant role in new home building. Last year the 200 largest homebuilders in the US accounted for 53.1% of all homes built which is quite a change compared to figures from the past. Previously small volume builders had constructed more than 70% of homes in the US. The same 200 builders saw a 24% increase in sales last year compared to 2012. It's expected that there will be an even greater increase in the construction of new homes as more empty lots become available and financing becomes easier. More of these builders are interested in participating with real estate professionals.
Even though larger builders may be dominating the market, there is still plenty of opportunity for smaller builders, for example taking down older homes and building new properties in established neighborhoods. This might mean building more luxurious single-family homes, while larger plots may be repurposed to create mixed-use developments. Such infill development is expected to continue for many years to come as these types of projects wouldn't interest the larger builders.
Another growth area is in senior housing. Increased life expectancy and a growing number of active adults aged 55 and over means more will be looking for new homes suitable for their needs. This is expected to continue to be one of the fastest-growing sectors in the construction industry.