In an effort to better determine the health of the housing market, the U.S. Department of Housing & Urban Development compiles and releases data every month. The most recent data available is, as of April 2016, revealed that sales of new homes increased to an annualized rate of 619,000, the largest increase in eight years. Various factors may account for the increase, including an improving employment market as well as additional homes completed and ready to sell.
Sales of new homes versus sales of existing homes, provides a glimpse as to the health and future growth of the housing market. The housing market currently employs over 2 million people, a dramatic difference from the height of the housing market in 2006 when the industry employed over 4 million workers. So as more new homes are built and sold, more builders are hiring workers to build homes.
There are 2 million fewer construction workers today than at the 2006 peak, due to many having retired and moved on. The supply of new entrants isn’t sufficient to satisfy builder needs in certain areas of the country.
Various factors contribute to how and why more new homes were sold throughout the country, among them being supply, weather, demographics, and job growth.
New homebuilders are becoming selective as to the homes they’re putting up. Builders across the country are being affected by higher material costs and a dire shortage of construction labor. In order to offset these challenges, builders are focusing on higher end more expensive homes, whose buyers are usually people with large cash down payments on which banks are willing to lend. Builders are avoiding the first homebuyer market, where incomes are less and banks less willing to lend. Builders are also selling larger more expensive homes faster, than smaller less costly homes nationwide.
Sources: Commerce Dept., Dept. of Housing & Urban Development