As housing inventory continues to be tight, creating a seller’s market even with higher interest rates, many prospective homeowners are turning to newly constructed homes. Recent reports indicate that home builders are starting to build more homes for these buyers, which over time can help ease the strain on available homes.
If you have been searching for a new home but continue to find the lack of affordable options to choose from daunting, building a new home may be right for you. Here are some considerations for building a new home versus buying an existing home in a tight market.
The Market Will Likely Remain Tight
Spurred by the buying frenzy in 2020 and 2021, many homeowners looking for upgrades took advantage of historically low mortgage rates to buy their dream homes. Having locked in low rates on a home they preferred and bought so recently, they don’t want to sell now.
Others were either priced out of the market or were already happy with their homes refinanced to the low rates and are now in better financial position. They too are not as inclined to sell now.
Both factors are causing fewer existing homes to be available, creating more competition for homes that are for sale and continuing to drive higher selling prices.
Good Things Come to Those Who Are Willing to Wait
While the timeline for searching for and buying a new home, especially when there are less to choose from, can fluctuate wildly, building a new home can provide more certainty around how long you will have to wait to move in. While weather and other factors can always cause some movement in the new home construction timeline, builders can provide you with a good timeframe to expect. Some builders may even have completed construction on homes that are already available as they develop new communities, sell model homes, or plans change for previous buyers, such as an unexpected job transfer.
On top of that, new home construction gives you more cost certainty. While building a new home is typically more expensive, high existing home prices have narrowed that gap. Building a home with a locked in price gives you better cost certainty that fits within your budget. Plus, many home builders partner with preferred lenders that know the area, the quality of the builders’ work, and can work with you directly to find the best financing options for your budget.
A New Home Can Save You Money
Building a new home can also save you money in the short- and long-term by avoiding costly remodels, appliance repairs and other unexpected repairs of older parts of the home.
By working with your builder to make changes to the floorplan and other house configurations you prefer to have, you can have a move-in ready home the way you want it from day one.
Whether building a new, custom home, one in a builder’s community, or buying an existing home is your preference, speak with your local mortgage lender to determine the best way to finance your purchase, including grants and other down payment and closing cost options available to you.
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