Home-builders See A Jump In New Home Sales

Everything ground to halt when the shelter-in-place order took effect. Home sales by the end of March were down with the impact of the coronavirus pandemic. In the first four weeks of the pandemic, newly built homes were down 85%. April is seeing a change with an uptick in home sales. Buyers are still buying according to Zillow and Redfin. Both have seen an increase in overall search traffic and buyer inquiries to agents. According to John Burns Real Estate Consulting (JBRC), which tracks builders’ inventory across the nation, they have seen the numbers starting to climb.

“We’re still down roughly 65%, but more positive news is coming out of the new home market, particularly for builders who are targeting the first time and entry level buyers,” said Devyn Bachman, manager of research at JBRC.

JBRC found that new construction homes are rebounding, especially in young couples with a dual income. Stephen Paul,
executive vice president at Mid-Atlantic Builders, a small company that has communities in Maryland and Northern Virginia, has seen an increase in business. He has had several spec homes that have sold recently.

Many believe that builders will recover first from the economic downturn. There is a lot more new home inventory out there right now than resales. Sellers are holding off because they do not want people to come through their homes.

“It’s safe, it’s clean, it’s new, and it’s easy to show at this point,” said Bachman. “Lots of the builders have set up virtual tours on their websites, the sales agents are setting appointments for consumers to come in and tour models in a safe distance manner. They’re actually able to show the new home, wherein several markets it’s very difficult to see resale listings at this point.”

Incentives are also an attractive feature for a home buyer. Builders can easily add incentives such as specific amenities and finishings, and an increase in real estate commissions. Many builders also have in-house mortgage services which makes the process easier and faster.

“I do think consumers are hungry for a deal, especially the first-time buyers,” said Bachman. “If you’re working on a quick move-in or one of the speculative inventory sales, you might be able to get some sort of discount in the new home market at this point, which is very attractive to that group.”

Proximity and size have also played a factor in many first time homebuyers taking the leap. A good chunk of first-time homebuyers rent apartments. During the shelter-in-place, apartment dwellers have much less space and have no outdoor areas such as a private backyard. Companies that do not normally offer work from home opportunities are allowing employees to work from home during the pandemic. Once people start to go back to work, their view toward a long commute might not be as tolerable. This might push many to reconsider how far they live from where they work.

Homebuilders are still building through the pandemic, the Department of Homeland Security has designated single- and multi-family housing construction as essential business, and hopefully once the shelter-in-place orders are lifted the housing market will boom throughout the country.

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