5 Ways New Construction Can Boost Consumers’ Home Buying Dreams
While the U.S. economy has rebounded nicely the past year, interest rates are still spiking, and home inventory remains tight. As such, the real estate landscape looks uncertain.
In fact, according to recent Freddie Mac reports, home affordability is at nearly a 30-year low. Unfortunately, this continues to sideline many potential homebuyers.
As spring and summer unfold, however, there’s renewed hope on the horizon. Sunshine seems to coax many buyers out of winter hibernation, generally making May one of the hottest home-selling months. On top of that, this year there’s fresh evidence that new construction is standing ready to reinvigorate today’s real estate market.
In February 2024, the world got its first glimpse of the Realtor.com® 2024 New Construction Consumer Report. With the release of our research comes deeper insights into the interrelationship between new construction buyers, agents, and builders.
A year-end survey of 2023 homebuyers combined with analysis from multiple Realtor.com® experts form the basis of our report. But along the way we’ve discovered even more illuminating trends. Together we hope this information assists builders and agents as they encourage potential homebuyers to consider new construction.
With that in mind, keep reading for five ways new construction is helping potential homebuyers actualize their homebuying dreams.
New construction is helping close the lack-of-inventory gap
In 2023, roughly 30% of homes on the market were newly built, yet around 13-15% of purchases were new construction.
This is exciting news because it means there are many consumers still wanting to become homebuyers despite the lack of available resale inventory. New construction is in the perfect position to fill this historic void in listings.
By making new construction more affordable with builder incentives, a whole new swath of homebuyers become potential customers. Plus, new homes being added to the market may help equilibrate the entire industry by eventually moderating home price escalation. And there’s the bonus of offering quality residential environments for those in search of options beyond standard resale properties.
New construction is attracting younger homebuyers
Some recent studies have shown that many Millennials say they will always continue to rent rather than buy. However, over 51% of Millennials do currently own a home. And when they purchase, they’re the ones most likely to consider new construction.
Our Realtor.com® 2024 New Construction Consumer Report found that 48% of 2023’s new construction homebuyers were Millennials (ages 26-41). In short, Millennials are now major money makers for the new construction market.
What’s spurring their interest? There are likely many factors in play. However, one plausible reason for the increase in interest from this age bracket is that they’ve been raised with tech and new advances. Accordingly, younger buyers may find modern attributes and features highly attractive in a brand-new home.
Whatever the case, new construction is welcoming younger homebuyers into the market. And it’s enticing them with current trends that align with their demographic’s life experiences.
New construction capitalizes on the desire for customization
People like getting to choose how their home looks.
There’s no question that most new construction homebuyers enjoy the prospect of inhabiting a never-before-lived-in space where everything is clean. But another big draw for new construction purchasers is the ability to personalize a build to their tastes.
That includes getting to choose floor plans or models, as well as selecting certain features and finishes within the home.
It also makes sense that today’s conservation-minded consumers would place high value on having options like eco-friendly materials and appliances.
Social media outlets like TikTok and Pinterest may also serve in the creation of many armchair architects and interior decorators. Essentially, new construction gives today’s homebuyers the option to live out their design fantasies in real time. Never underestimate the power of a “vision board come to life” as a powerful incentive for new construction home purchasers.
New construction takes homebuyers’ lifestyles into account
While we still use the term “single family home,” new construction does a great job of recognizing that “family” means different things to different people.
One particularly interesting insight from our survey was that buyers consider their pets when purchasing a home. Especially people with dogs.
The Realtor.com® New Construction Consumer Report found that 71% of homebuyers in 2023 considered their dog in home purchase decisions. By providing pet-friendly amenities in their offerings, new construction builders are welcoming buyers whose “children” are of the four-pawed variety.
In other words, a family may look “traditional.” Or the structure may be more like a DINKWAD (double income no kids with a dog). Either way, new construction is capable of handling all types of homebuyers and their unique needs with ease.
New construction can make home buying more affordable
Many potential homebuyers today still automatically assume new construction is out of their financial reach.
In fact, according to our survey, perceived high price is the top reason 2023 homebuyers cite for not considering new construction. Meaning, they didn’t even look at new construction homes because they just figured they couldn’t afford it.
This is where education about the realities of the new construction market becomes vitally important. New construction newbies frequently don’t understand the future cost benefits of brand-new dwellings. Many also don’t know to ask about the possibility of builder incentives. When agents and builders explain these affordability boosters, however, homebuyers start to realize that new construction is a viable option.
Taking the time to give homebuyers this education pays off in the long run as well. That’s because 91% of new construction homebuyers say they would do it again.
Bottom line, once homebuyers experience new construction, they’re more likely to want new again in the future. Then it truly becomes a case of “build it and they will buy.”
If you want to learn more about how the new construction market is in a position for record growth and what today’s homebuyers truly want, be sure to download the entire Realtor.com® 2024 New Construction Consumer Report today!
