The U.S. housing supply has hit a multi-decade historic low, making it nearly impossible for buyers to find a home that meets their needs. To put it in perspective, total housing inventory at the end of August was 1.1 million units, down 14.1% from one year ago, according to a NAR report. At the current pace, unsold inventory sits at a 3.3-month supply — but the real estate market norm is 5 to 6 months of housing supply.
Fortunately, with the rise of remote work and the changing preferences of buyers, newly built homes are becoming a more accessible option. Residential new-build permits increased nearly 7% just between July and August in 2023, according to the U.S. Census.
Here’s what you need to know to get that new-build home of your dreams:
Consider using a builder’s preferred lender
With interest rates as high as they are, many builders provide interest rate buy-down incentives that can help buyers. This arrangement typically involves using the builder’s preferred lender. It benefits the builder because they know the financing won’t be delayed once construction is complete. And the buyer gets better terms on their loan. This could mean better monthly payments on a new-build home compared to the cost of a pre-existing home.
You can also look for builders with rate locks, which means they purchased loans when interest rates were lower and can offer those below current market rate. A lower interest rate can save you thousands in monthly payments.
Customization at your fingertips
New home construction meets the needs and desires of today’s homebuyers. For instance, new Opendoor data shows 6 in 10 people have changed their thinking about what a ‘dream home’ includes. Today 81% prefer simpler style and design, which they can easily find with a new build. Additionally, good home quality is a growing differentiator. In hot markets, homes in better condition than comparable homes in worse condition have sold six days faster, according to our home condition report.
Increasingly, home builders are making customization an easier and more enjoyable part of the process. Whether you’re looking to stay on a budget or splurge for those marble countertops, there are an abundance of options that builders can help you navigate. And of course, you’ll save with brand new energy-efficient appliances.
Keep in mind too that in the purchase agreement, you can also negotiate additional incentives with your builder that can go toward home design. An extra $5,000 in design cost incentives could mean an upgrade in appliances or that walk-in closet you’ve been dreaming about.
Be adventurous with location
The cost of undeveloped land in outlying areas is far less expensive than it is in cities. If you have the flexibility to consider a home outside large population areas, there are new-build opportunities to be had.
By 2025, the number of remote workers is expected to double to 36.2 million from 16.8 million in 2020. And during 2019-2022, the average moving distance increased 38% (from 213 miles to 294 miles on average), indicating that location is less important than it once was.
Unlock the equity in your current home
For many homeowners, buying and selling a home at the same time can feel like a nearly impossible feat. We found that 77% of new homebuyers say that moving is the most stressful aspect of the home buying process. Particular challenges include trying to time closing dates to avoid the hassle of moving twice, not being able to sell your home quickly enough to take advantage of builder incentives, the financial burden of a double mortgage, or even losing out on a dream home due to building delays.
Since 2017, homeowners looking to buy a new build home have been able to shop with confidence knowing they have a cash offer from Opendoor and can time the close of their existing home with that of their new construction home — effectively eliminating the stressors that come with the buying-selling double header. These homeowners have used Opendoor’s new build trade-in program.
Here’s how it works: While homeowners are shopping for their new-build home, they can see a preliminary offer from Opendoor after they answer a few questions about their current home. Next, they walk Opendoor through the home over a video call and a brief in-person assessment to finalize the Opendoor offer. Once the builder provides the closing date on the new construction home, buyers can align their dates for a seamless transaction process. In addition to having the certainty of a cash buyer, there are no home showings or a need to make repairs. Opendoor further empowers buyers with a flexible move date anywhere from 14 days to nine months following their closing.
Opendoor’s homebuilder team works with over 2,000 builder sales offices nationwide to ensure a smooth transaction for everyone. Opendoor partners with national builders, like Lennar, Pulte, and Century Communities but also works with local, independent builders.
As the U.S. housing supply remains low, new builds provide a unique opportunity for buyers to secure their dream home and move on to their next chapter with ease.
Are you a home seller interested in selling to Opendoor and taking advantage of the homebuilder partnership program? Visit https://www.opendoor.com/w/builder to learn more.
Are you a homebuilder interested in partnering with Opendoor? Visit https://www.opendoor.com/w/partner/builder to learn more.
Alex Toth is the Director of Business Development at Opendoor.