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New Home Construction: Alive and Well, but Why?

Despite headwinds, demand for new homes is strong

It is well-documented that as interest rates rise, it puts a damper on the demand for new homes.  If you follow the news, you are aware that home loans are no longer available for 3%, but now are hovering around 7%.  When you couple the increase in mortgage rates with the price inflation that has occured in materials, home prices are up dramatically in the last few years.  All this should mean doom and gloom for home builders, right?

Thankfully, demand for new homes is as strong as it's been for some time, and there are a few reasons for that: 

First, there have not been enough homes built over a period of many years.  This simply means that there are not enough places for everyone to go, and we need to keep building to handle the demand from overall population growth and factoring in the fact that some units are destroyed or become uninhabitable every year.

Second, those higher mortgage rates mean that people aren't wanting to sell their existing houses to you.  Most folks are saying that they will stay in place and keep the payment they have.  If you need a home, though, that means there is not much to choose from.

This has combined to make homebuilders in 2023 surprisingly optimistic.  There will always be people moving in or out of an area - and they need a home.  Some folks have been waiting for a long time to build their dream home, and they realize that prices are not likely to go down, so they say "let's go!"  At Dale Koontz - Builder, we have had a very active year for selling new homes in spite of pricing and interest rates.  And we are grateful for that!

If you are in the market to build a new home, please contact us.  We would love to discuss your project.