Positive Outlook: Housing Construction Gains Momentum

By: Kaitie Moore Underwood | REALTOR®, Blue Collar Commercial Group

In any housing market, there are compelling reasons to consider new construction homes. Offering lasting benefits and customization options, they have become even more appealing as the housing market continues to evolve.

Despite initial concerns of a recession, the housing construction industry is showing signs of growth. Fannie Mae’s forecast for housing projects a significant rise, with households shifting from urban areas to larger homes in the suburbs and exurbs to accommodate their need for more space. This trend has contributed to the prosperity of the housing market. Despite an economic downturn in the early stages of the pandemic, housing starts increased by approximately 7% in 2020, followed by another 15% surge, reaching the highest production level since 2006. In the years following the Great Recession, the multifamily sector experienced notable strength.

Furthermore, the persistent shortage of existing inventory has fueled the demand for new homes. March witnessed a 9.6% increase in new home sales, which have been steadily trending upward since the fall of 2022. The new housing market appears more optimistic compared to the beginning of the year. The National Association of Home Builders’ sentiment index reached a level of 50 in May for the fifth consecutive month, indicating “neutral” market conditions. Many home builders also expressed a more positive outlook for the remainder of the year.

The intermittent declines in mortgage rates have contributed to homebuilders’ growing optimism. However, there is an anticipation of stricter bank lending standards, which may limit future construction, particularly among smaller and custom builders. Nonetheless, the forecast for new single-family starts remains favorable for the year.

“Housing remains exhibit number one for why we expect the recession to be modest. It continues to outperform our expectations, and we expect that its relative strength will help kickstart the economy into expanding again in 2024,” stated Doug Duncan, Senior Vice President and Chief Economist of Fannie Mae.

In the current low-inventory housing market, finding the ideal home can be a challenge. Considering a newly constructed home expands your options and provides the freedom for customization and low maintenance. To explore what’s available in your neighborhood, it is recommended to work with a local real estate expert who can provide professional advice and guidance. If you need expert advice and personalized assistance, get in touch with Blue Collar Commercial Group. It would be our pleasure to be a resource to you, even if you’re not yet ready to buy. Reach out today: 737-203-4178 or [email protected]