With a record score of 83, the National Association of Home Builders’ (NAHB) Housing Market Index (HMI) recently reached its all-time highest point in the 35-year index history. The HMI assesses builder perceptions of current sales for single-family homes and projections over the next six months, along with prospective new build buyer traffic.
What’s backing builder confidence? The proof is in the numbers
The chart below shows how builder confidence plummeted after stay-in-place orders were enacted earlier in the year.
But now, it’s rocketing back:
Confidence has grown in every region of the U.S., based on the HMI’s three-month moving averages:
- Northeast: Jumped 11 points to 76.
- Midwest: Climbed 9 points to 72.
- South: Increased 8 points to 79.
- West: Rose 7 points to 85.
The numbers support this surge in confidence. The NAHB’s latest report shows a 4.1-percent increase in single-family housing starts, rising to an annual rate of 1.02 million. Likewise, single-family permits also saw a 6-percent increase, up to an annual rate of 1.04 million, indicating notable growth in new build developments.
Another report, this one from the Mortgage Bankers Association (MBA), confirms a 33.3-percent increase in mortgage applications for new homes compared to a year before.
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Joel Kan, the MBA’s Associate Vice President of Economic and Industry Forecasting, explains:
“The housing market continued to exceed expectations in August, as housing demand for new homes stayed strong and the job market continued to recover… The new home market has maintained its path of recovery throughout the summer, and record-low mortgage rates and households seeking more space will likely continue to drive demand into the fall.”
While buying a new or existing home can sometimes come down to preference, there are several unique benefits of making a new build purchase:
- Extra options in energy-efficiency. This includes new windows, appliances, roofing, and more. Improved energy-efficiency can help to reduce utility bills, adding up to thousands of dollars in savings over time. ENERGY STAR features in your home also help decrease your carbon footprint and preserve the environment.
- Lower burden of maintenance. Less maintenance may be one of the main reasons homebuyers opt for new construction. Moving into a brand-new home means you’re less likely to run into little repairs like leaking faucets that need fixing. New build homes also typically come with more comprehensive warranties that can protect your investment for several years.
- Upgrades and customization. Whether you’d like granite countertops, hardwood floors, a mudroom, or a home office or multipurpose room for virtual schooling, you’ll get the chance to customize your new home to meet your needs while it’s being designed. Unlike an existing home, where floor plans are static until you renovate, you have more control in how you modify a newly built home before it’s constructed.
You might be thinking about listing your home this fall but are worried about low inventory levels that can make it harder to find a house to buy. If so, consider speaking with your realtor about new construction.
For first-time homebuyers, too, looking into new construction could provide you with a wider selection in your price range — along with new build benefits like customization, less maintenance, and lower costs for energy.
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For educational purposes only. Please contact your qualified professional for specific guidance.
Sources deemed reliable but not guaranteed.