Why It’s a Good Time to Build Up a New-Home Niche
By Melissa Dittmann Tracey, Guest Contributor
If they build it, will buyers come? That’s the question I posed in my recent article in the latest issue of REALTOR® Magazine. Home builders believe they can better compete against the resale market in offering up greater housing options and better costs. It’s making more home buyers consider new—more than may have before. New-home construction has been accounting for about a third of the national single-family inventory since 2021, according to The State of the Nation’s Housing 2024, a report released by Harvard University’s Joint Center for Housing Studies.
Fifty-three percent of new-home buyers say they specifically sought out only new construction when they started their real estate search; 39% considered both new construction and existing homes, according to realtor.com®’s 2024 New Construction Consumer Report. Millennials, ages 26 to 41, are the most likely to be drawn to new home construction. But all age groups share what’s so appealing about buying a new-home: Having everything “new/never used,” getting modern floor plans, perceiving it as a better investment, and having the ability to customize features of the home, according to the survey.
While more than half of home buyers surveyed say one of their biggest fears about new construction is the high costs, builders say it needn’t be. The cost gap between new and existing homes are shrinking: The median new-home price in May was $417,400 compared to $419,300 (an all-time high for existing homes).
Builders are touting deals, too: Sixty-one percent of builders say they’re willing and able to buy down mortgage interest rates, often to the likes of the 5% range (the current average is near 7%), according to a builder survey conducted by Zonda, a construction research firm. What’s more, the majority of homebuilders in June said they used sales incentives to attract home buyers, according to a National Association of Home Builders survey. Nearly 30% of builders say they cut home prices to bolster sales.
Talk Up the Options
“There’s a tremendous opportunity for real estate agents in the new-home space,” says Amy Lessinger, president of RE/MAX LLC. “These days, many developers would rather deal with a buyer’s agent than directly with prospective buyers. An experienced agent has the skills to keep the purchase on track and help nervous buyers feel confident about their decision.”
Real estate agents can build up a new-home niche, such as:
- Visit new-home developments and learning the floor plans and offerings of each builder, as well as the available land to build from scratch. After all, in areas where lots are tight, learn infill development opportunities that could allow buyers to tear down existing properties and rebuild.
- Attend builder association meetings, visit Parade of Homes events (which showcase newly built or remodeled homes) and join builder-sponsored special events, like golf tournaments.
- Boost your “new” online presence: The majority of new-home buyers say they turned to online resources first to learn more information, such as photos, floor plans, online reviews and community videos, according to the realtor.com® survey. Make these readily available at your website.
- Take a course: The Center for REALTOR® Development offers “New-Home Construction and Buyer Representation: Professionals, Product, Process,” which covers topics from the acquisition and construction phase to the personalization of a new home and best practices in representing new-home buyers.
Also, for home buyers considering building new, share this article from HouseLogic, 7 Things You Wish You Knew Before Building Construction, where I highlight what I learned after undergoing the new-home process three times over the last 15 years (Psst: The top tip for buyers is why they need a real estate agent by their side!).
Melissa Dittmann Tracey
ABOUT ME:
Melissa Dittmann Tracey is an award-winning journalist who covers the latest real estate news and trends. You can hear her weekly on the syndicated radio show and podcast, Real Estate Today, in her housing trends segment, “Hot or Not?” She is the creator of the Styled, Staged & Sold blog and a frequent contributor to Houselogic.com and REALTOR Magazine. She’s also the host of The Housing Muse podcast at http://www.housingmuse.com. Follow her on Instagram or X @housingmuse.
