New Construction Rose Year-Over-Year in Q4 2017

In the fourth quarter of 2017, the share of new construction homes was 16.4 percent of all single-family homes for sale, a 2.2 percent increase year-over-year, and researcher Greg McCarriston says this is welcome news in the face of the housing market's tight supply.

While builder confidence is near record highs, and housing starts are at the strongest pace since 2007, there are still challenges slowing down new construction in the affordable housing sector. Limited credit, regulatory costs, and cost of materials were said to be major challenges for builders by the National Association of Home Builders, yet the cost of labor and the labor shortage was deemed builders' top concern in 2017 in a recent NAHB survey, Redfin reports. “The residential construction industry lost 1.5 million jobs during the Great Recession,” says Robert Dietz, NAHB chief economist. “We haven’t gained more than 800,000 back since then.”

“In light of rising construction costs, builders have often favored higher-priced homes that can absorb the costs,” said Dietz. “Townhouse construction solves a number of supply-side issues at once, making greater use of land, and adding homes in a price tier that needs building the most. The only question is whether communities will allow builders to add the density that comes along with them.”

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