As real estate professionals we are trained to keep a very close eye on changes in the housing marketplace. But we also need to pay particular attention to what is happening in the world of new construction, as construction trends can have a dramatic impact on the housing market. Here are five important trends we’ve seen recently in new construction that you may find interesting:
House size decreases – When the real estate market is booming house sizes seem to increase because builders and home buyers have more confidence. When the market struggles, the size of new homes being built decreases to provide an alternative to the increased costs of larger homes. According to the Census Quarterly Starts and Completions the average single family size of a new home decreased from 2,727 square feet to 2,652 square feet – even in light of the fact the market has been improving. The median home size held steady at 2,478 square feet. In fact, I believe we are going to continue to see a decline in home size due to the large number of younger people buying homes and the increased number of baby boomers looking to downsize their nest.
Custom home building on the rise – The number of homes being built on a privately owned land rose from 39,000 to 48,000 in the second quarter of 2014. This is an interesting trend to keep an eye on! Previously, while single family construction expanded custom home building had decreased. Custom home building has now had two positive gains in the last two quarters of 2014. I believe this is a trend that will continue for a number of reasons, including the rise of multi-generational families living together, and boomerang kids coming back home to live with their baby boomer parents. Also, as the market improves and equity increases it allows people to build the custom home they have always dreamed about.
New Construction booming in the 55+ market – Builders are getting very excited about the 55+ single family housing market as the demand is increasing. And as the population ages the need for housing in this demographic continues to grow. According to the NAHB’s 55+ Housing Market Index (HMI), the index was up again to 56, which is the highest second quarter reading since the index began tracking this in 2008. One of the things that has contributed to the index increase has been the rise in home sales in the past six months. The 55+ market is limited by consumers being able to sell their existing homes at a good price, so they are able to buy in a 55+ community.
Single-family, residential construction spending on the rise – Residential construction spending has fluctuated over the past year, but overall private, residential construction spending is up 7.4% since June of 2013. There have been months when that number declined, but its year-over-year increase of 7.4% shows an upward trend that is sure to continue based on the recent demand in the marketplace.
Multi-family construction spending soars – The Census reports that while single-family construction spending has seen a moderate gain, multi-family construction has soared. Multi-family construction spending is up 33.2% year-over-year.
Being up to date on the latest new construction trends can be useful to your buyers and sellers alike. So, make sure to keep your eye on the new construction market and get familiar with the trends in your area!