New construction still popular as most Americans believe it’s a bad time to buy an existing home
New construction is expected to rise by 4.7% this year (iStock)
New build homes are regaining popularity as existing home prices and interest rates remain high. A little over a million single-family new builds were started in March, the U.S. Census Bureau and the National Association of Home Builders (NAHB), reported.
March saw a 21.2% increase in new builds compared to a year ago. However, new builds are down by 12.4% from this February.
Texas, California and Florida had the highest number of new build permits this year, U.S. Census Bureau data showed. Less populated states like North Dakota, Alaska, Wyoming and Vermont had the fewest number of building permits. Washington, D.C. also made the list for fewest number of permits.
New home construction is predicted to increase, particularly if interest rates stay high and existing home inventory remains low. Single-family new builds are expected to increase by 4.7% in 2024. About 988,000 units will likely be built, the National Association of Home Builders estimated.
"The new-home market is becoming a dominant player, and we expect that to continue in 2024," Ali Wolf, chief economist with housing research firm Zonda, said.
Single-family new construction will also continue its trajectory upward in 2025, NAHB predicts. New builds will rise by 4.2%, up to 1.03 million units.
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THERE ARE NOW 550 US CITIES WHERE THE TYPICAL HOME VALUE IS $1 MILLION OR MORE
A majority of Americans believe it’s a bad time to buy
Buying a home is expensive; more expensive than it’s been in years, causing many Americans to shy away from buying. About 76% of Americans polled in a recent Gallup poll said now is a bad time to buy.
Alternatively, just 21% think now is the right time to purchase a home. Rising home prices account for this low number.
Nearly 68% of respondents expect home prices to increase in their area, up from 56% last year. Geography doesn’t play a role in rising prices. Respondents living in the city, suburban areas and rural areas all over the country agree that home prices will rise in the next year.
Opinions don’t differ over income levels or political affiliations, either. Americans from every walk of life are dealing with high-cost homes and expect to continue doing so for the foreseeable future.
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MORE THAN A THIRD OF GEN Z, MILLENNIALS SEEK HELP FROM THEIR PARENTS TO AFFORD A HOUSE DOWN PAYMENT
Rising home prices causing more adults to move back in with their parents
Home purchases for new and existing homes are still too high for many prospective buyers. In lieu of purchasing a home or staying in the high-cost rental market, more adults are moving back in with their parents, Thrivent’s 2024 Boomerang Kids Survey found.
About 46% of parents surveyed had their adult children move back in with them. Half of them cite rising housing costs as the main reason for moving back. Last year, just 35% said the same.
"This is a wakeup call that's gone unanswered. More young adults returning home underscores the enormous – and growing – financial pressures they're facing after graduation. The ripple effect it has on them and their parents is a problem we can't afford to ignore," Chaz Black, Thrivent financial advisor, said.
Along with high housing costs, debt is one of the major contributing factors driving adults to move back home. Nearly 39% of survey respondents are delaying buying a home due to their student loan payments.
Adult children moving home often has a negative effect on the parents’ finances. When asked, 38% of parents struggled to pay off debt and 37% found it harder to save for their long-term goals while their adult children lived with them.
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MORE HOMEBUYERS ARE PAYING DISCOUNT POINTS AS INTEREST RATES CONTINUE TO RISE
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