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New Construction in 2022

Real Estate Agent with Cary Apex Durham NC Referrals - eXp Realty 142349

March 08, 2022 07:41 AM

How is new construction selling differently in 2022?

There are significant changes in the way new homes are selling compared to how they were sold in 2019 and 2020. These differences are in all price ranges and the same for custom home builders and production/national homebuilders.

Little to no presales (pick floorplan and choose options)
Builders are waiting to sell houses until they are partially built
Prices are increasing one or more times per month
Many new homes are selling above the list price
Builders are getting higher deposits from buyers

Little to no presales

Builders cannot control how long a house will take to build and it is hard to estimate building costs, so builders are building homes they know will sell quickly and choosing finishings and materials that they are confident they can get in stock when they need them. Making changes to floorplans is taking a long time and some cities and counties are taking 30-60 days to give a building permit so the builders are focusing on floorplans they have built before to streamline the material ordering and permit process.

Builders are waiting to sell houses until they are partially built

There are 2 reasons they are doing it – 1) the further along the house is when it goes for sale, the more the builder can confirm his/her costs and timeframe and 2) the further along it is, the more the buyer can understand that no changes can be made

Frequent price increases

In January and February, builders in the Raleigh area saw prices increase again for lumber. Labor costs are going up quickly as well as materials, so builders are having to pass those costs along to the buyers with increased prices. Most builders are selling at a fixed price, whereas in 2020 they were having buyers sign addendums where the purchase price would increase if material costs increased during the build of the home. It was hard for buyers to commit without knowing the final sales price.

New houses are selling above list price

Since fewer homes are being built because homes are taking longer to build due to supply shortages, and resale homes are very hard to find, buyers are desperate to find a home to buy. This is creating situations where builders are accepting offers above the asking or list price. Some builders are announcing the release of a home or a lot for a home to be built and accepting offers for 1-2 days, so buyers are bidding blind, not knowing how many other buyers are competing for the home. That is making buyers offer more money.

Higher builder deposits

Builders used to accept a flat amount such as $10,000 or would accept a 3-5% deposit at the signing of the contract or within 30 days of signing the contract. So far in 2022, all of my new construction buyers are paying 10% deposits immediately upon signing the contract. This deposit is the same whether the home is partially built or will be 9-12 months from being complete.

Demand for new homes is not going to decrease and builders who have been around a long time know they cannot risk having houses sit on the market unsold, so if you are considering a new home, please talk to me so I can help you get the best deal possible in 2022.