The nation’s shortage of newly built homes is driving up sale prices, but it’s also having an unexpected effect: It’s weeding out some buyers not qualified enough to afford them.
More than 9 in 10 homebuilders in a February survey reported their homebuyer prospects were either more qualified to buy a new home or about as qualified as the ones from last spring, according to John Burns Real Estate Consulting.
The firm’s Director of Research Rick Palacios Jr. on Monday shared some of the takeaways from this survey on Twitter.
One builder in Atlanta told the firm that despite rising prices for new homes, there’s no lack of qualified buyers. Those buyers who are not as qualified are merely being moved to the back of the line, this builder said.
The survey results paint a more detailed picture from builders throughout the country as the market navigates rapidly rising sale prices, supply-chain issues, dwindling inventory and project delays.
In the most recent data from the U.S. Census Bureau, the average sale price for a new home had risen to nearly $497,000 in January — a mark 19 percent higher than it was at the same time the year before. More than half of new homes sold for at least $423,000, suggesting the price increases were broadly distributed throughout the national market for new builds.
Skyrocketing prices have coincided with steep declines in the number of finished builds. In the first month of last year, approximately 62,000 completed new homes either sold or were listed for sale at the end of the month, according to the census report. A year later, that number had dropped to 54,000.
While finished inventory has been in decline, there’s plenty more in the pipeline. The number of homes for sale under construction rose 40 percent in the past year, from 184,000 to 258,000.
A number of builders surveyed reported limiting the number of homes they were selling in order to help navigate uncertain costs of construction and protect their profit margins, Palacios wrote.
While most homebuilders surveyed said their buyers had become more qualified over the past year, that wasn’t the case in every part of the country. In Southern California, 14 percent of builders reported their prospects were less qualified than in last spring. Of that group, the majority said their buyers were “much less qualified.”
On the other end of the spectrum, Texas builders reported a much improved group of homebuying prospects. Not a single builder surveyed in the Lone Star State in February reported their buyers were less qualified than they were in the spring.
