If you are planning to buy a new home, you’re not alone. National sales of new single-family houses are on the rise for 2015, both nationally and in Phoenix and Scottsdale, which is an encouraging sign for the housing market.
August sales of new single-family houses for August 2015 were at a seasonally adjusted annual rate of 552,000, the best monthly figure since February 2008, according to estimates released jointly by the U.S. Census Bureau and the Department of Housing and Urban Development. This is nearly a six percent increase from July, a month that also saw an increase, according to the statistics.
Sales of new single-family houses in September 2015 were at a seasonally adjusted annual rate of 468,000. Although this is 11.5 percent below the revised August rate, it is still 2 percent higher than the 2014 rate.
Data for October 2015 will not be released until Wednesday, November 25.
Locally, the new home market has also been strong. According to the Cromford Report, the September market was stronger than it has been in years, at least as far as unit volumes go. During the month of September, 997 deeds were recorded across Maricopa County for newly constructed single family and condo properties, the highest unit total since December 2008.
Some believe, though, that the figure could have actually been higher if not for one snag: a shortage of lots where new houses can be built.
USA Today recently reported that builders are complaining about a lack of developed lots. In most cases, a developer will purchase land, install infrastructure (such as roads, water, and sewer lines), and then sell the tract to a builder who will construct a subdivision. Now, those lots are fewer and farther between, builders say, due to a number of factors:
- Federal environmental rules have become more stringent, including a broader definition of wetlands that builders must avoid or mitigate, according to the article. At the same time, local governments are increasingly requiring developers make concessions such as financing the expansion of a sewage plant.
- Developers are also having a difficult time obtaining financing. Thirteen percent of builders who also develop land reported to the National Association of Home Builders (NAHB) that they didn’t even bother seeking a loan during the second quarter because they knew they wouldn’t get it. Additionally, some lenders are raising borrowing costs.
- There’s also less land to develop. Buyers increasingly want to live in or near urban centers (versus outlying suburbs), but these metropolitan areas are already largely developed, making it difficult to find available lots. Zoning laws have also become stricter, especially for multifamily complexes.
Because of these factors, it’s likely that there will be fewer new homes available for sale. As the supplies become tighter, it’s only logical that the prices of these new homes will increase.
So, if you’re thinking about buying a new home, you might want to do it now, especially since the Federal Reserve is again contemplating raising the interest rate in December.
Before starting your search for a new home, sit down with a professional realtor who can advocate for you during the buying process. Once you set foot into a model home, you’ll be at the mercy of the builder during the sales process.