Are New Home Sales in Free-Fall?

More New Construction listed in MLS can only mean one thing. Numbers for the sale of brand new homes are down. Developers do not typically welcome the necessity to list their properties in MLS (more on that later).

Recently I’ve noticed a considerable uptick in MLS listings for New Construction homes. I would suggest this is partly due to an increase in builder costs, and partly to a shortage of experienced labor and sub-contractors, making a new construction home both a more expensive option and a lengthy wait.

Last time I checked, the timeline between contract and close for a newly constructed home was between 6 to 8 months, an insurmountable obstacle for many home buyers. This, along with a noticeable difference in price per square foot, has convinced a growing number of home buyers to opt for a resale home over New Construction.

If you happen to be shopping for a New Construction home, you’ll find that the choices available to you in MLS are usually limited, largely because Developers employ sales representatives of their own. This solves multiple issues for builders: they avoid the cost of the MLS fees that are charged to Realtors, they save the cost of a Realtor’s commission, but most importantly, the sales agent works solely for the builder and not for the buyer.

So as a home buyer, what would this mean to you? First and foremost, you have NO representation when you purchase a home directly from the builder. No one is looking out for your best interest. The paperwork, agreements, negotiations… the entire transaction is skewed to the benefit of the builder. This is business, plain and simple. What is not made plain to a home buyer looking for a new construction home, is that you are 100 percent entitled to your own representation, and it doesn’t cost you a cent.

One caution here… you must bring your Realtor with you the first time you visit a construction site. I can’t stress this enough. If you talk with the builder or their sales people before you call me, I can’t help you with anything at that particular construction site, neighborhood or community.

I offer a discount on the purchase of New Construction homes, and representation is free

Zillow and The National Association of Home Builders have similar theories about why these conditions exist and how New Construction is, and will be affected.

New-Home Sales Shrink

By RISMedia Staff

With builders burdened by costs and inventory stubbornly tight, June new-home sales shrank, 5.3 percent to 631,000, according to the Commerce Department. Inventory in June was 301,000, representing 5.7-months’ supply, and the median price was $302,100.

“Uncertainty caused by tariffs and the talk of trade wars are making homebuyers more cautious, and builders are taking note of this situation,” said Randy Noel, chairman of the National Association of Home Builders (NAHB), in a statement. “Not only are consumers and builders concerned about the current lumber tariffs, but also the next round of proposed tariffs on a number of goods and services.”

“Though this is the lowest monthly annualized sales pace since October 2017, new-home sales for the first half of 2018 are up 6.9 percent on a year-to-date basis compared to last year,” said Robert Dietz, chief economist at the NAHB. “This indicates solid demand for new-home construction.”

“[The] larger-than-expected monthly dip in new-home sales does not diminish a steady string of year-over-year gains, although those year-over-year gains have steadily slowed over the first half of this year,” said Aaron Terrazas, senior economist at Zillow, in a statement. “With existing-home inventory so tight for so long, and prices rising so quickly, home builders clearly are responding to a market starved for new supply and buoyed by a strong labor market.

“Despite rising costs, builders are succeeding at delivering more homes, but it remains to be seen how long they can continue what is becoming a very complicated dance, as costs march upward and rising mortgage rates gradually eat into homebuyers’ affordability,” Terrazas said.