Wall Street Journal Reports Home Builders Are Driving New Home Sales
A typical new home costs an average of 37% more than buying an existing home, so why are we seeing an increase in new homes? For starters, inventory levels of existing homes are low. The National Association of Realtors reported that the number of homes for sale fell to 1.74 million in January, the lowest level since the year of 2000. Many homeowners are worried that prices have not yet improved sufficiently, so they are reluctant to list their home.
The lack of inventory may not compare to the reality that home builders are banks are getting creative. Working with home buyers to get into their home, providing credit counseling and incentives like closing credits and government programs, builders are making a difference in the building economy.
50 percent of new home sales in fourth quarter of 2012 were sold to borrowers with some kind of government-guaranteed loan, with the FHA backing 31% of new-home sales with a mortgage.
New FHA lending standards are driving decisions of where to buy land, how much to pay for it and how many features to put into the home. Not every new home on the market is “tricked out” with granite, wood floor and more.
Consumers are choosing to build what they want, rather than buy a used home that may need some TLC. Even though it means spending a little bit more, building is becoming a long-term family investment that means more.