October figures for new builds in the US point to one of the busiest years for residential construction. The pending sales index rose by 45.8% in the year. The increase brings the figure to its highest since spring 2007.
Big rise in pending sales
The latest figures from Meyers Research/Zonda show that the new-build market has risen sharply this year. The new home pending sales index for October registered a year-on-year increase of 45.8%.
According to records, this is the biggest hike since spring 2007. It indicates a return to activity within the residential construction sector, currently struggling to keep up with demand.
Raleigh in North Carolina posted the highest increase in new home pending sales. In this city, the index rose by a massive 81.7%. Jacksonville in Florida stood in second place with a 68.4% increase in pending sales of new builds.
Reasons for rises in new builds in the US
Analysts point to three main reasons behind the big increase in pending sales of new builds in the US. The most significant is lack of supply. Inventory levels for single-family homes have been dropping for several quarters and this year has seen them plummet still further.
Low interest rates for mortgages are another factor behind the surge in sales of new homes. Buyers can currently make the most of rock-bottom interest rates to buy more expensive properties. And as a result, demand has risen sharply across the country.
The third reason lies in the new trends that have emerged this year. Homebuyers want larger homes with private yards and space for a home office. New-build single-family homes cater specifically for this market, particularly those in suburban locations rather than cities.
Housing starts also up
As well as the rise in pending sales of new homes, housing starts have gone up. They rose by 4.9% in the year to October, reiterating a steady trend seen throughout this year.
In the single-family home sector, starts went up by 8.6% in the year. This was also the best figure since spring 2007.
Permits up in Southwest Florida
The strong market for new builds in the US is also apparent in the number of new permits. In Southwest Florida, they rose by 27.42% in the year to September, according to the latest figures from the Southwest Florida Regional Economic Indicators.
The report, published by the Florida Gulf Coast University, also showed a 35.4% increase for permits in Charlotte County.
Strong demand in this part of Southwest Florida has pushed sales and prices up for single-family homes. In September, sales in Charlotte County rose by 41% with prices experiencing an increase of 10%.
Invest in new builds in the US
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(Source: Zonda, FGCU)