News of a housing recovery is everywhere. While remaining cautious, it’s safe to say that things are on the mend. And new construction is at the forefront of this recovery.
This month, the National Association of Home Builders noted gaining numbers in builder confidence and the Commerce Department reports that new-home sales edged up 3.3 percent from March to April to a seasonally adjusted 343,000-unit annual pace after a 332,000-unit rate in March. “This month’s modest uptick in builder confidence,” says NAHB chairman Barry Rutenberg, “comes on the heels of a four-point gain in May and is reflective of the continued, gradual improvement we are seeing in many individual housing markets as more buyers decide to take advantage of today’s low prices and interest rates.” (see story).
What is restricting further growth of this sector? Overly tight lending regulations and inaccurate appraisals, in part. With rates this low, people are still facing greater hurdles to obtain loans and issues with appraisals complicate the situation should they manage to get them in the first place.
Nonetheless, new construction is making a comeback and while newly built homes represent less than 20 percent of the U.S. housing market, they place a far larger footprint on the overall economy. Each home built creates an average of three jobs per year and produces about $90,000 in tax revenue, according to the National Association of Home Builders.
As builder confidence gains footing and the new affordability of new homes means that families are able to afford much more than they have in years, you can bet that those who can buy are. And when it comes to not having to worry about costly deferred maintenance or unexpected repairs on a resale home, it’s no surprise that more and more, new homes are leading the way in our housing recovery.