Single Family Construction is On the Rise: What Does It Mean For You?

The construction world is celebrating a significant increase in housing starts at the tail end of 2020. The National Association of Home Builders reports that overall housing starts increased 4.9% in October, the best pace since the Spring of 2007! This has implications not only for the industry, but for buyers as well.

What Explains the Rise?

A number of factors could explain the rise in single-family home developments.

• The election. Reflected by an equally perilous stock market in the final months preceding the election, presidential transitions are always uncertain times. With the results finally settled and a path forward clear, economic confidence is growing.
• COVID-19 containment. While nationwide case numbers have begun climbing again, promising vaccine news and greater knowledge of the virus’ effects have likely renewed confidence in the future for homebuyers.
• Living costs in cities. Apartment and living costs in cities continue to escalate, even in “secondary” cities like Charlotte or Raleigh-Durham. A desire for more affordable housing is especially evident in the Midwest, where combined single-family and multifamily starts grew by 15.5% due to being mostly in suburbs and exurbs.
• Lower interest rates. Housing rates hit their lowest point since 1971, averaging out at 2.78% in 2020. Lower interest rates are always favorable for new mortgages.

What Could Happen Next?

That depends! Kiplinger predicts that interest rates have hit a low point and will gradually rise over the coming years. Part of this is ironically due to the COVID-19 vaccines that have inspired economic confidence.

Much of this is also speculation, but reduced gridlock in Congress – especially dependent on the Georgia runoff elections – could produce additional stimulus packages. While these can no doubt spur homebuying, the resulting economic recovery could also mean more multi-family developments for renters and city-dwellers.

What Does it Mean for Buyers?

In short, it means that now is a great time to buy! Interest rates are still at a historic low and new housing abounds, especially relevant for buyers seeking a custom home or new construction. With COVID-19 vaccines finally showing light at the end of the tunnel, future economic recovery means property values will likely climb, making a new home a stellar investment right now.

Looking to get in while the market is hot? Absolute Construction is a premier builder of sustainable, beautiful custom homes in the Triangle. Contact us today to learn how to make your dreams a reality!