New Construction is all the rage during covid times
The shortage of houses on the market led Mackenzie Jones to stop looking at resale properties and opt for new construction, even if it was a little farther out from Washington, D.C., than she planned.
‘‘The bidding wars and competition for the inventory in the seller’s market was definitely something that drove me into looking for new construction,’’ said Jones, a manager at a nonprofit who began her search in the city but ended up buying a suburban town house. ‘‘I’ll continue to work in the city and do community work in the city.’’
New construction has become the saving grace for a growing number of buyers drawn into the market by historically low mortgage rates fighting over a dwindling inventory of existing homes. That unfulfilled demand for resale homes is spurring a boom in the home-building market.
At the start of 2020, before the coronavirus pandemic, the home-building industry was projecting a 3 percent nationwide growth in single-family houses. It ended up with a more than 10 percent gain in single-family construction, said Robert Dietz, chief economist at the National Association of Home Builders (NAHB).
In December, the year-over-year supply of homes for sale nationwide reached a record low, dropping nearly 40 percent to just under 700,000 listings, according to a Realtor.com report.
Derrick Swaak, partner and managing broker at TTR Sotheby’s International Realty in McLean, Va., and president of the Northern Virginia Association of Realtors, said the number of homes for sale at the end of December in his jurisdiction plummeted 50 percent to 60 percent from five years ago.
‘‘Part of the reason sellers are reluctant to list right now is not only because of the pandemic, but it’s also where are they going to go and how are they going to find their next home?’’ said Jan Brito, president of the Greater Capital Area Association of Realtors.
Margeau Gilbert, a real estate agent with Exit Right Realty in Laurel, said the situation isn’t new. But the historically low mortgage rates, spurred in part by a Federal Reserve move last spring to boost the economy through the purchase of mortgage-backed securities, has exacerbated demand. ‘‘Even in the midst of COVID-19, the market is on fire,’’ Gilbert said.
Home construction soared at the end of 2020. Housing starts, which measure the commencement of a residential project with the pouring of the foundation, overall increased 5.8 percent to 1.67 million units in December, according to the Census Bureau and NAHB. Housing starts for single-family houses, which represented 1.34 million of that figure, rose 12 percent, according to the report.