Despite a lot of people having their heart set on new homes and investment projects, new home construction is having an effect on the U.S. property market.
According to a U.S. residential sales report, fewer new homes are in the best situation – permits to build new abodes, housing starts (construction projects that begin for new project purposes) and a number of new homes being built has dropped.
However, the amount of new permits, housing starts and finished homes entering the market were all up across the year, which still shows sign of progression.
A senior economist from Realtor, Joseph Kirchner, said: “Unfortunately, it is not enough to stem the steady decline in the number of homes on the market.
“The drop [in construction] results in increasing prices on homes and, in some markets, bidding wars.
“There are not enough homes on the market, and the shortage of homes is most pronounced at the low end of the price range.
“As prices continue to rise, Millennials and households with low and moderate incomes will find it more difficult to take the homeownership plunge.”
Between March and April, the number of new authorised permits did decrease by 2.5%, which is worrying some property investors. However, these figures change rapidly which is why the housing market is so unpredictable.
Builders are receiving 5.7% more permits and the highest number of permits was issued in the south, approximately 577,000. Builders received approximately 336,000 permits in the West, up 8.7% from March and a massive 18.3% from the year before.
Housing starts dipped 2.6% in April from March but were up by 0.7% over April. New home construction projects help to build the economy and country as a whole, so it is very important that not just investors monitor the housing market, but citizens of the U.S., too.
New homes help to ease the housing shortage but are mainly aimed at wealthier buyers. The average price of a new property has been $315,000, according to the U.S. Census Bureau and U.S. Department of housing and Urban Development.
NAR’s Chief Economist, Lawrence Yun, said: “This continued, slow pace of construction of new homes is a major bottleneck to a faster economic and housing recovery.”
As time moves on, the housing market will unveil itself in a way of its own. Despite the many drawbacks and the changeability of home construction plans, the U.S. property market tends to withstand situations like this, as it has a strong economy and much support behind them.
Written by Gemma Smith