Underbuilding and higher construction costs are impacting the supply of new homes says Redfin
Underbuilding and higher construction costs are impacting the supply of new homes says Redfin.
The new quarterly analysis found that the average cost of a new home in the July-September period was $374,000, up 3.3% from the same period of 2016. New homes sold for an average premium of $87,000 in the third quarter.
“After almost a decade of underproduction, we are finally seeing a slow, steady increase in single-family housing starts, up 9% from a year ago,” said Redfin chief economist Nela Richardson. “But high building costs are limiting the construction of homes that today’s buyers can afford. This is why even in the midst of extreme inventory shortages for existing homes, new homes are sitting on the market instead of selling.”
The cost of building a new single-unit home in the third quarter of 2017 reached the highest level since 1988 at $240,000 as material and labor costs continued to rise.
Labor is a particular issue for builders with 25% fewer workers than in 2006 and the aging workforce will only exacerbate this problem.
“We would love to build more affordable starter homes, but when high-end homes cost the same to build and are far more profitable, we lose the incentive to build smaller units,” said Isaac Stocks of Azure Northwest Homes, a Seattle-area home builder.
The full report is available from Redfin.
The new quarterly analysis found that the average cost of a new home in the July-September period was $374,000, up 3.3% from the same period of 2016. New homes sold for an average premium of $87,000 in the third quarter.
“After almost a decade of underproduction, we are finally seeing a slow, steady increase in single-family housing starts, up 9% from a year ago,” said Redfin chief economist Nela Richardson. “But high building costs are limiting the construction of homes that today’s buyers can afford. This is why even in the midst of extreme inventory shortages for existing homes, new homes are sitting on the market instead of selling.”
The cost of building a new single-unit home in the third quarter of 2017 reached the highest level since 1988 at $240,000 as material and labor costs continued to rise.
Labor is a particular issue for builders with 25% fewer workers than in 2006 and the aging workforce will only exacerbate this problem.
“We would love to build more affordable starter homes, but when high-end homes cost the same to build and are far more profitable, we lose the incentive to build smaller units,” said Isaac Stocks of Azure Northwest Homes, a Seattle-area home builder.
The full report is available from Redfin.
