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Supply of New Construction Homes Slipping. What Does this Mean?

Home builders are looking forward to 2014. Recently, the U.S. Department of Housing and Urban Development released a report showing sales of new construction homes rose 8% in August (a 13% improvement from last year). For some builders, buyer traffic hasn’t been this high since the real estate collapse in 2007-2008. And in addition to the rising home purchases, sales prices have risen nearly $13,000 on average nationwide. What does this mean exactly?

Huntsville AL New Construction Homes for Sale

New Construction Home Supply Explained

The jump in sales price is not only a sign of a recovering economy. It’s a sign that buyers are buying homes before builders can replenish the supply. Low mortgage rates, seasonality, and renewed confidence in the country’s economy has fueled much activity in the real estate market around the area. Huntsville, itself, has benefited from an increased supply of new construction homes since the late spring, but recently, those numbers have begun to decline. New homes being listed for sale are spending less time on the market. During the summer months, homes were being snatched up even quicker. As a result, the supply of homes are declined.

Huntsville Home Inventory
Provided by Altos Research Co.

As supply of these homes reduces, sellers (the builders) begin to gain a negotiating advantage when it comes to home purchases. However, negotiating with builders isn’t the same as negotiating with other homeowners. Builders have no incentive to sell right away. They don’t have to relocate for another job or face family changes. As the market turns in their favor, they don’t need to offer “specials” on their houses. They can sell for the price they want — as buyers face fewer choices of homes on the market. [Read: Why Buyers Love New vs Used Homes]

Home Buyers Should Buy Now

At the moment, supply of new construction homes is only beginning to decline. Notable builders like Valor Communities are still working away on their neighborhoods. But today’s “offers” are disappearing. Home prices are rising. If you’re looking for a deal, the best value might be the one you find today. See what properties are available and learn more on how we can find the dream home for you.

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