The sales of new homes in the United States was the highest last month, since 2007. More people have been looking for new construction, rather than buying older houses. Also, the hurricanes have impacted this statistic because new homes are in high demand in the areas where there was a lot of destruction. In the South, where hurricanes hit, there was a 26% increase in the sale of new homes last month. However, the South was not the only region that showed an increase in the last month. In the Northeast, sales rose 33%, and in the Midwest, sales grew 11%.
Right now there is an excess supply of existing homes in the market. Potential house buyers are frustrated because of the high amount of old homes, and the low amount of new ones. Therefore, the demand for construction should increase for the next couple months or years. However, construction companies are having trouble trying to find enough workers to keep up with the demand. Also, most of the new houses being built are not projects that can be done overnight. In fact, the average price of a home last month was $385,000, the highest average price since 1963. Last months sales showed more than 19,000 houses sold over $500,000 and less than 13,000 houses sold under $200,000. This shows the type of houses that are in high demand right now.
http://www.foxnews.com/us/2017/10/25/us-new-home-sales-soar-to-highest-level-in-decade.html
I'm curious to see if this trend of building new homes will continue to grow or if it was a short surge because of the destruction that has happened the past few weeks across the country.
ReplyDeleteThat's a good question Brady. I would expect it to not continue to grow solely because of the looming housing market, which is due to crash soon.
DeleteI am also curious. It is quite possible, however, that homebuyers are finally back to trusting the market when it comes to mortgages, so they do not have any reason to be apprehensive. As long as the demand for new houses continues to increase, then this trend will be noticeable in the foreseeable future.
ReplyDeleteYounger buyers are behind this trend according to some sources. Is it possible there could be a different kind of financial crisis caused by this pent up demand? With the shortage of new houses, the demand would drive up new house prices and could cause a speculative bubble.
ReplyDeletehttps://www.nbcnews.com/business/real-estate/who-s-powering-housing-market-surprise-it-s-millennials-n768196
It is interesting to see that young buyers are causing this trend. It makes sense that younger people want to start their adult lives by building a new house. I was also thinking that a shortage of new houses could be an issue. Your idea of a speculative bubble is something to look out for, and is definitely possible. Hopefully, this doesn't happen though.
DeleteI wonder if there will be a regional shift in home buying because of the hurricanes scaring people away from the coastlines. Obviously right now there is not because many people who are already in the South need new homes in their existing locations. But there might be a decrease in first timers in the coastline areas because of the hurricane threat.
ReplyDelete