The rate of new home construction matters to every home buyer, whether they know it or not. That’s because the supply of available homes for sale balances buyer demand and new home construction is the fastest way to add supply. When inventory is low – as it has been in recent years – new home construction provides buyers with more options and less competition, while helping to moderate prices on all homes, old and new. So where are new homes being built now? Well, according to the National Association of Home Builders’ Home Building Geography Index, single-family home construction has slowed recently almost everywhere. But while fewer new homes are being built in larger, metro, suburban counties – which saw a 3.8 percent decline during the second quarter of this year – smaller, rural counties saw a 1.8 percent gain. Robert Dietz, NAHB’s chief economist, says smaller markets have more favorable conditions. “Favorable construction dynamics in low-population density areas, such as lower regulation and land costs, have boosted multifamily construction in smaller markets while the high-density areas have seen construction declines,” Dietz said. (source)
