As a personal finance writer specializing in the housing market, I frequently hear that building a brand-new home is more expensive, complex, and limited compared to purchasing an existing one. However, in the current real estate landscape, where low inventory and high prices are hindering many potential buyers, new construction is offering accessibility and affordability. Some homebuilding companies are providing financial assistance to buyers, such as covering closing costs or offering lower mortgage rates for the initial years of the loan. Others, like KB Home, are concentrating on constructing smaller, energy-efficient homes that will save homeowners money in the long term.
New construction has become increasingly popular, accounting for over 30% of single-family home sales, up from 10% to 12% prior to 2023. The National Association of Homebuilders anticipates an increase in new housing starts in 2024 and 2025. Many prospective homebuyers are waiting for mortgage rates to decrease, but even then, it may not solve the affordability issue. When mortgage rates drop, there is likely to be a surge in demand for existing inventory, driving up home prices.
Robert Dietz, chief economist at the NAHB, stated, “Ultimately, housing affordability conditions can only improve with the construction of affordable, attainable supply.” To learn more about how new construction is broadening options for new homeowners, I visited KB Home in Denver, a company founded in 1957 and the sixth-largest homebuilder in the US. KB Home has developments in various states, including Arizona, California, Colorado, and Texas, among others.
During my visit to Turnberry Villas, a development in Northern Colorado, I observed the appeal of new homes. With personalized options and brand-new features, buyers can avoid major maintenance or renovation costs that often come with older homes. Additionally, smaller floor plans are becoming more popular, offering lower price tags and appealing to a wider range of buyers.
Some builders are providing financial incentives, such as mortgage-rate buydowns and closing cost assistance, to attract buyers. Energy efficiency is also a significant factor, with many new homes incorporating green building features to reduce energy consumption and utility bills. KB Home, for example, offers EnergyStar-certified homes with WaterSense-labeled fixtures, helping homeowners save on both energy and water costs annually.
Overall, new construction is providing a viable option for homebuyers looking for affordability, sustainability, and customization in today’s competitive housing market.