Starter Homes Are on the Way

Good news for first-time buyers: more starter homes are on the way. A recent analysis by BUILDER online shows the number of homebuilders offering entry-level housing rose 25 percent last year compared to the year prior. 

Homebuilders Say Major Uptick Coming: Steady job growth, low mortgage rates, and pent-up demand is prompting an increase in the demand for new single-family homes, and homebuilders say they're ready to build them.  Single-family starts will reach 64 percent of historically normal levels by the fourth quarter of this year and rise to 77 percent of normal by the end of 2017, NAHB reports.

By the end of 2017, the top 20 percent of the largest states will reach at least 102 percent of normal single-family production levels, compared to the bottom 20 percent, which likely will still remain below 65 percent, NAHB reports.

While the numbers are rising, the entry-level market is still a fraction of what it once was in 2010.
Still, “the re-entry of the entry-level buyer has begun, but this group’s next moves will be gradual,” says Metrostudy’s Brad Hunter about young buyers’ emergence into the housing market. “Income challenges remain, and there are still relatively few new house developments who target this group.”

NAHB forecasters predict that single-family production will see a 14 percent uptick this year to 812,000 units, and then rise another 19 percent to 964,000 units in 2017.

Source:  BUILDER (April 27, 2016)