US Real Estate Market

New Home Construction

US New Home Construction, Prices and Sales

It’s not a reach to say that buying a new home is tops on many American’s wish list. Although demand for new homes is intense, a lack of supply is dampening those dreams of home ownership.

New US home sales rose 4% across the country in October and new home construction kept pace vs September. The promise of growing production in 2022/2023 is drawing the eyes of investors.  Home construction stocks are trending upward.

New Home Shortages – 5 Million

However, it seems the home shortage is worsening, and estimates have it that we could be facing a slowdown in construction in 2022. That remains to be seen, however the US market will be severely in short supply.

“Despite the extraordinary efforts of our trade partners, the supply chain issues that have plagued the industry throughout the pandemic have increased during the second half of the year. We continue to work closely with our suppliers, but shortages for a variety of building products, combined with increased production volumes across the homebuilding industry, are directly impacting our ability to get homes closed.”  -Pulte CEO Ryan Marshall.

During 2021, 1,724,700 house construction permits were issued, ups 17.2% from 2020’s total of 1,471,100.  And an estimated 1,337,800 new dwellings were completed in 2021, up 5% from 2020’s  figure of 1,286,900. Housing units completed in 2021 reached an estimated 1,337,800 which was up 4% from 2020’s figure of 1,286,900 units. Construction spending growth slowed to .2% in December.

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The NAHB homebuilder sentiment fell by 1 point to 83 in January of 2022 from a 10-month high of 84 in December. This is shy of a forecasts of 84. The 6 month home sales sub-index fell to 83 from an upwardly revised 85.

US Cities with Most Construction

Florida, Texas and Arizona are the hot zones for single house construction.

CSA CBSA Metro Region Total Authorized Starts 1 Unit 2 Units 3 and 4 Units 5 Units or More
428 37980 Philadelphia-Camden-Wilmington, PA-NJ-DE-MD 11888 1153 178 300 10257
288 26420 Houston-The Woodlands-Sugar Land, TX 6885 4067 64 0 2754
408 35620 New York-Newark-Jersey City, NY-NJ-PA 6145 1217 124 123 4681
429 38060 Phoenix-Mesa-Chandler, AZ 4918 2603 98 58 2159
999 12420 Austin-Round Rock-Georgetown, TX 4716 2101 54 58 2503
206 19100 Dallas-Fort Worth-Arlington, TX 4304 3323 44 116 821
370 33100 Miami-Fort Lauderdale-Pompano Beach, FL 3520 598 38 47 2837
216 19740 Denver-Aurora-Lakewood, CO 3480 1061 62 26 2331
122 12060 Atlanta-Sandy Springs-Alpharetta, GA 3460 2190 6 13 1251
500 42660 Seattle-Tacoma-Bellevue, WA 3124 678 54 42 2350
400 34980 Nashville-Davidson–Murfreesboro–Franklin, TN 3120 1247 2 8 1863
348 31080 Los Angeles-Long Beach-Anaheim, CA 2474 785 102 37 1550
148 14460 Boston-Cambridge-Newton, MA-NH 2462 420 48 34 1960
548 47900 Washington-Arlington-Alexandria, DC-VA-MD-WV 2372 951 2 4 1415
378 33460 Minneapolis-St. Paul-Bloomington, MN-WI 2256 918 24 7 1307
999 45300 Tampa-St. Petersburg-Clearwater, FL 1978 1350 4 0 624
172 16740 Charlotte-Concord-Gastonia, NC-SC 1789 1336 6 3 444
412 35840 North Port-Sarasota-Bradenton, FL 1768 938 30 4 796
422 36740 Orlando-Kissimmee-Sanford, FL 1667 1457 4 32 174
300 27260 Jacksonville, FL 1611 1531 8 0 72
488 41860 San Francisco-Oakland-Berkeley, CA 1592 274 16 18 1284
294 26900 Indianapolis-Carmel-Anderson, IN 1516 790 20 4 702
348 40140 Riverside-San Bernardino-Ontario, CA 1337 829 18 42 448
472 40900 Sacramento-Roseville-Folsom, CA 1235 675 6 0 554
332 29820 Las Vegas-Henderson-Paradise, NV 1211 1131 10 40 30
484 41700 San Antonio-New Braunfels, TX 1121 789 16 0 316
450 39580 Raleigh-Cary, NC 1114 972 0 0 142
357 31540 Madison, WI 1092 138 12 0 942
482 41620 Salt Lake City, UT 1035 440 8 19 568
999 41740 San Diego-Chula Vista-Carlsbad, CA 1034 255 12 30 737
147 14260 Boise City, ID 1026 649 10 15 352
198 18140 Columbus, OH 1022 439 4 18 561
476 41180 St. Louis, MO-IL 1019 465 26 0 528
312 28140 Kansas City, MO-KS 1010 656 34 35 285
163 15980 Cape Coral-Fort Myers, FL 1003 707 72 0 224
440 38900 Portland-Vancouver-Hillsboro, OR-WA 961 516 4 13 428
176 16980 Chicago-Naperville-Elgin, IL-IN-WI 935 634 22 54 225
482 39340 Provo-Orem, UT 888 593 2 38 255

New home starts and completions are important elements of the  housing market forecast.  They’re growing slowly but not enough to fulfill demand. It shows us where supply and prices are really headed. Homebuilder sentiment however rose to 83 and current sales conditions rose 3 points to 89 according to NAHB.  They report a 3% increase in new home buyer traffic.  Sales expectations for the next 6 months remained the same.

Year over year, new homes sales have plummeted by 23%.  However, sales of new construction homes rose 11% month to month from September to October in the Midwest and were up 0.2% in the Southern US region. In the Northeast and West sales dropped 11.8% and 1.1% respectively.

If higher interest rates are avoided, we might see the residential home construction market improve in 2022. Growth from 2021 to now has been positive, even with supply chain and labor shortages. Those issues with high land prices, limited land to develop, plus government regulations will hamper new home availability in 2022 and beyond. That pushes prices up.

Lot availability is at multi-decade lows and the construction industry currently has more than 330,000 open positions,” said NAHB Chief Economist Robert Dietz. He is calling on politicians to resolve the severe shortage of lots, however these cries have been sounding for a long time now with no action.

Prices are rising and housing supply continues as the biggest factor in real estate. The fact is, government attempts to suppress demand don’t work and instead create unnatural pressures that can lead to market sell-offs.

You’re intrigued about the possibility of owning a new home. And like many others you might be wondering if resale house prices are going to fall?  Resale and new home prices likely aren’t going to fall and a housing market crash is not likely to happen. There’s too many positives supporting the economy and housing.

New Home Prices Rising

2021 Median Price (USD) Homes for Sale
January 373,200.00 300,000
February 362,000.00 303,000
March 359,600.00 305,000
April 376,600.00 315,000
May 390,400.00 327,000
June 374,700.00 350,000
July 406,000.00 365,000
August 407,600.00 382,000
September 404,700.00 383,000
October 407,700.00

US New Home Building Permits December

Building permits for private residentail homes rose 9.1% in December to 1,873,000 from 1,717,000 in November. This was 6.5 percent more than December 2020’s rate of 1,758,000. Single‐family permits in December rose 2% to 1,128,000 from the revised November volume of 1,106,000. Permits for buildings with 5+ units rose 17.2% to 675,000 units in December.

US Housing Starts in December

Privately‐owned housing starts in December rose 1.4% to a new annual rate of 1,702,000 units, from Novembers estimate of 1,678,000. That was up 2.5% more than 12 months ago.  Single‐family housing starts in December rose 2.3% to 1,172,000 from November’s 1,199,000 houses. The December rate for units in buildings with five units or more was 524,000.

US Housing Completions in December

Privately‐owned housing completions fell 8.7% in December to an adjusted annual rate of 1,295,000 from November’s estimate of 1,418,000.  This number is down 6.6% from the 1,386,000 completions 12 months ago.  Completion of single‐family homes in December rose 3.9% to a new rate of 990,000 units from the November rate of 953,000. In multifamily buildings above 5 units, there were 299,000 unit built.

New home price timeline chart US. Screenshot courtesy of Statista.

Most mid-income buyers have plenty of savings to put on a new house.  That fact means home builders are jumping into the construction with a lot of zeal this year.

New Residential Construction Stats for October

Census.gov released stats for new residential home construction.

Lumber Costs

NAHB cites lumber prices as having flattened out. Of course, availability is another issue during the supply chain problems and shipping within the US. They say there is a substantial shortager of carpenters.

Lumber Prices. Screenshot courtesy of NAHB.

Builder Optimism is High

The US Commerce Department says builder optimism is high and with low interest rates and big preference for buyers, there’s little to stop significant sales in August and September.  The only drawbacks are regulation and high lumber prices. With buyers finding houses for sale scarce, the new home market is vital to the health of the real estate market.

NAHB new home construction timeline chart. Screenshort courtesy of eyeonshouding.org

New Home Construction Forecast

NAHB offers their free new home construction forecast to 2023.

Housing and Interest Rate Forecast, 04/06/2021
2017 2018 2019 2020 2021 2022 2023
Housing Activity in thousands
Total Housing Starts 1,207 1,248 1,295 1,395 1,431 1,464 1,501
Single Family 851 872 893 1,000 1,058 1,081 1,108
Multifamily 356 376 403 396 374 383 394
New Single Family Sales 616 614 685 823 874 897 919
Existing Single-Family Home Sales 4,904 4,737 4,749 5,076 5,777 5,815 5,921
Interest Rates
Federal Funds Rate 1.38% 2.38% 1.38% 0.13% 0.07% 0.08% 0.26%
Treasury Yield:
Ten Year Maturity 2.33% 2.91% 2.14% 0.89% 1.74% 2.21% 2.47%
Freddie Mac Commitment Rate:
Fixed Rate Mortgages 3.99% 4.54% 3.94% 3.11% 3.41% 3.91% 4.17%
Prime Rate 4.10% 4.90% 5.28% 3.54% 3.55% 3.99% 4.43%

Wondering who makes and sells new homes in the US? Check out these companies and if you’re a stock market investor, review the stock prices of publicly listed home builders.

New Residential Home Sales

NAHB’s Robert Dietz reported home builders using pricing incentives in April, but have since reduced those incentives as sales have picked up.

New Single Family Home Inventory 2020. Screen capture courtesy of NAHB

Don’t forget to check the housing market in 2021, and more on major metro markets in including Los Angeles, Denver, Dallas, Philadelphia, Atlanta, Boston and New York. See the state forecasts for Florida and California.

See the latest mortgage rate forecast, economic forecast, and why home prices will rise.

Will There be a Housing Market Crash? | Will There be a Stock Market Crash? | Stock Market Forecast | Florida Housing Market | California Home Prices | California Real Estate | US Real Estate

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