Chances are that if you see new residential construction in your area, the individuals wearing hard hats and steering the cranes are building apartments to rent, and not new homes to sell. That’s because new home construction companies are facing a labor shortage and a tight credit environment that makes it hard to get loans. According to National Association of Realtors® Chief Economist Lawrence Yun, the lack of inventory is a contributor to the downward trend of new construction sales. In June, new home sales fell more than 8 percent; the decline is inconsistent with existing home sales, which rose 2.6 percent that same month. Yun believes that there is stable buyer demand for new homes, but if those types of homes aren’t available, buyers will purchase existing homes instead.
Talk to Realtors® about new construction trends in your area. Ask if their clients previously considered new construction, but weren’t able to locate a property? Talk to recent buyers about their motivations for purchasing an existing home over new construction?