America builds around 1.4 million new homes every year – a massive contribution to easing the demand for housing that also keeps property prices from spiraling beyond the reach of millions of families and first-time buyers.
Some 944,000 of these new constructions were for single-family homes in 2023 – 66.8% of the total, according to finalized figures taken by the US Census Bureau.
Owning a brand new home is many Americans’ dream.
Today, folks are asking if that dream might ever be a reality because of rising costs for labor and building materials.
And many real estate agents are now fielding questions about whether buying an existing home is a better option, even if it sometimes requires a compromise on location.
The core concern recently has been tariffs – the ones threatened on overseas lumber, steel and aluminum, much of which comes from Canada.
Even the additional cost of kitchen appliances, especially those coming from the European Union and Canada, would add to the overall burden of building a new home, as compared with purchasing an existing property.
However, the sale of new homes is strong currently, increasing 7.4% on an annual basis to 724,000.
Lower mortgage interest rates have helped to prime the market.
A 30-year fixed rate mortgage was 6.84% in February and then dropped to 6.65% for March.
The Department of Housing and Urban Development and the U.S. Census Bureau count new homes deals when a sales contract is signed or a deposit is accepted – not when folks move in.
The median new home sale price in March was $403,600, down 7.5% from a year ago. Sales were strong at lower price levels. New home sales have been 33% higher for those priced below $300,000.
Meanwhile, the National Association of Home Builders (NAHB) has welcomed the White House move to drop additional tariffs on Canadian-sourced building materials.
It had been calling for a balance between affordability and a desire to promote domestic manufacturing.
The tariff challenge would have been only one factor influencing the cost of a brand new home.
Land availability and its associated value, plus labor costs and availability, are two massive issues that have nothing to do with tariffs.
If you’re looking to buy a new home but you’re also prepared to look at existing properties as an alternative, I’d be delighted to help you.