One of the biggest problems facing the US property market is the lack of new single-family homes. Despite a rise in permits, ground breaking and completion, strong demand means that there simply isn’t enough development of available building plots for new single-family homes in the US to go round.
Estate agents across the country report the same story – families in search of a new 3 or 4-bedroom house in the suburbs with its own garden often come up with nothing. A report published by the US property portal, realtor.com, claims that homebuyers looking for new single-family homes this summer “may be out of luck”.
Rise in permits
According to the US Census Bureau, some 1,354,000 permits for new builds were issued in March. This figure represents a rise of 2.5% on February and a higher increase of 7.5% on March last year.
However, despite the all-round rise, new single-family homes are falling behind. Just 840,000 permits of the total were for this type of property, 5.5% less than the number issued in February.
Rise in starts of new single-family homes
When it comes to breaking ground, single-family homes present slightly better statistics. The number of starts in March was 1.9% higher than February with the year-on-year figure reaching double figures. In the 12 months to March, almost 10.9% more detached properties were started.
But as far as the final step is concerned, new single-family homes fall back again. March saw the completion of 1,217,000 new detached properties. This represents 5.1% fewer reaching the market than in February.
“It’s a slight step back for single-family construction,” says Danille Hale, Chief Economist at realtor.com. “Builders are building more homes, but it’s still not enough.”
Strong demand for new homes
The overriding characteristic of the US property market during 2017 was lack of supply. This shortage has continued into this year. The National Association of Realtors reported in March that inventory in the US stood at 3.6 months’ supply, down from 3.8 months a year earlier.
Sales rose in the year to March and properties spent an average of just 30 days on the market, down from 34 days a year ago. Furthermore, half the homes sold in March were on the market for less than a month.
In Florida, the pattern for March was similar. Although sales of single family homes fell by 3.5%, median house prices rose by 8.2%. Inventory levels continued to drop and stood at 3.8 months at the end of March, down from 4.1 months a year earlier.
Challenges facing new single-family market
Realtor.com cites several issues facing the market for new single-family homes in the US. Lack of available building plots is one of the more pressing problems – builders cannot source enough to get up with supply. Labour costs have risen over the last year in tune with construction costs.
New homes tend to be more expensive than resale properties. In February this year, the median price for a new single-family home in the US reached US$326,800 while the average for a similar resale property was US$241,000. The price for a new home reflects the higher construction standards, better fittings and fixtures, and the fact that the buyer has no refurbishment to carry out.
(Sources: realtor.com, National Association of Realtors, Florida Realtors)