A major player in the US homebuilding recorded its busiest month ever in June on the back of strong demand. Low interest rates, chronic short supply and the shift in homeowner requirements are all driving the single-family home market. In this sector, new-build properties have the edge over resale.
Best June ever
Taylor Morrison, the fifth largest US homebuilding company, notched up its busiest month for net sales ever in June. It registered a 94% increase compared to the same month a year earlier. The rise was consistent across the 11 states where the company has a presence in the US.
Taylor Morrison attributes the huge jump in sales partly to new technology. The company allows buyers to take virtual and/or self-guided tours, both essential tools during the pandemic when real estate offices are closed.
“Most builders and real estate agents have been relying on this type of tour,” said Sheryl Palmar, CEO of the company. “However, builders have the advantage as it’s easier for them to allow potential buyers to tour homes on their own.”
Sales and construction up in May
This picture of strong buyer interest was apparent across the nation in May. According to the US Census, sales of new homes dropped drastically in March and April. However, they rose by 13% in the year to May.
Construction followed a similar pattern with falls at the start of the pandemic and a rise in May. Figures from the US Commerce Department show that in May, US homebuilding was on track for 974,000 units this year. However, analysts believe that the actual figure will exceed the one million mark since permits rose by 14.4% in May.
Renewed builder confidence
Further signs of a good year for new builds came in builder confidence in June. According to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index, confidence in newly built single-family homes rose by 21% to reach 58%. Experts point out that any figure over 50% indicates a positive market.
“Housing clearly shows signs of momentum,” said Robert Dietz, Chief Economist at the NAHB. “Builders report increasing demand for single-family homes in suburbs that feature lower density neighbourhoods.”
New trends for US homebuilding
New trends in demand for single-family homes have emerged during the pandemic. According to a survey conducted by Taylor Morrison, three clear tendencies are now driving the market. These are:
- Improved home technology – this is a must-have requirement for remote working and schooling, set to continue in the short and medium terms.
- More space – confinement has led to the desire and need for larger homes. New single-family homes tend to be bigger than resale properties and buyers can often choose the configuration that suits them.
- Suburban living – the pandemic has seen a rise demand for homes in quieter areas, outside cities. Homebuyers now prioritise suburban living.
These trends began to appear in May when interest in single-family homes soared by 25%. Experts attribute the increase in sales of new builds to these three new trends, all of which look set to stay in the foreseeable future.
Florida construction less affected by confinement
US homebuilding suffered during March, April and May as states introduced and eased confinement measures. According to a report issued by Construction Coverage, New York experienced the biggest impact. Construction suffered a 71.3% drop in this state during April. Michigan saw the second highest with a 64.3% decrease in activity.
Construction in Florida, however, was less affected. New permits issued in the Sunshine State in April fell by just 15.8% to total 12,223. However, the chronic shortage of single-family homes persists in the state – in May, supply dropped to just 3.3 months.
(Source: CNBC, Herald Tribune)