New Home Construction is Future Inventory Competition

Increasing building permits issued for single-family homes is the best indicator of how many newly built homes will rise over the next few months. The latest U.S. Department of Housing & Urban Development Residential Sales Report acknowledges that the number of these permits were up 7.7% over last year. New home construction is future inventory competition and could lead to a buyers market. At the minimum, it will cause the average days on market to increase.

Impact on Home Buyers?

More inventory means more options to purchase. Danielle Hale, Realtor.com’s Chief Economist, explained this is good news for the housing market – especially for those looking to buy:

“It’s not spectacular construction growth, but it’s slow and steady in the right direction. Eventually, the pickup in single-family home construction will mean [buyers] will have more options. Especially with the limited number of sales right now, more options are really needed.”

Impact on Home Sellers?

More inventory means more competition and likely longer time on the market.

Today, because of the tremendous lack of inventory, a seller can expect:

  1. A great price on their home as buyers outbid each other for it

  2. A quick sale as buyers have so little to choose from

  3. Fewer hassles as buyers don’t want to “rock the boat” on the deal

With an increase in competition, the seller may not enjoy these same benefits. As Hale said:

“As new construction continues to increase, home shoppers will eventually have more [choices] and a bit more time to make purchase decisions compared to today’s quick-moving housing market.”

Bottom Line

If you are considering the sale of your Northern VA home, it might make sense to beat this new construction competition to the market.