Trends in national housing demand often seem like an on again/off again roller coaster—and that’s just the daily figures. Many reports in the mainstream media focus on extremes in construction statistics. Meanwhile, the larger body of data in the middle tends to get left out of the headlines. Recently, comprehensive methods of assessing industry trends have generated more nuanced results that provide a clearer window on today’s national housing demand.
A survey by a major research and analysis firm encompassed the entire United States, not merely the hottest and coldest markets, and rated housing demand on a scale of 1 to 10, with 1 representing lowest demand and 10 the highest. It comes as no surprise that current industry data shows climbing prices are the main factor holding back growth in the market for new homes. Both builder and potential new homeowners are affected, as the low availability of desirable lots sends prices into the sticker shock zone, depressing national housing demand.
The average demand rating for new homes across all studied markets is 6. Demand for finished lots climbs higher to an average of 8. Other research polling buyer attitudes clearly depicts the consequences of this reality. Over 40 percent say they’d prefer a new home, but less than half indicate a willingness to pay the premium price. When new home purchase price exceeds 20 percent that of an existing home, interest level declines to just 17 percent of respondents.
Areas of high demand for both new houses and new lots include Austin, Texas; South Florida, Houston, Texas; Las Vegas and the San Francisco’s Bay Area. These areas tend to share certain common characteristics, chiefly sufficient availability of lots, plus demographics where higher costs and interest rates haven’t hammered demand. Thus far, local economies and employment prospects in these areas have kept demand for new homes afloat. The primary X-factor remains whether the market will maintain momentum even as available lots diminish and the sticker price of new construction climbs.
For builders, contractors and other industry professionals, Construction Monitor offers up-to-date building permit data to accurately track changes in today’s markets.
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