Broker’s Perspective: Is New Construction Declining?

Our brokers are deeply connected to the issues that face local home-buyers and sellers. In this series of blogs, “The Broker’s Perspective” Windermere Stanwood and Camano Island brokers provide insight into current market trends and topics. This week, we discuss The Seattle Times article on the looming housing market slowdown with broker, Dianna Pence.

The U.S. housing market — particularly in cutthroat areas like Seattle, Silicon Valley and Austin, Texas — appears to be headed for the broadest slowdown in years. Buyers are getting squeezed by rising mortgage rates and by prices climbing about twice as fast as incomes, and there’s only so far they can stretch.
“This could be the very beginning of a turning point,” said Robert Shiller, a Nobel Prize-winning economist who is famed for warning of the dot-com and housing bubbles, in an interview. He stressed that he isn’t ready to make that call yet.
A slew of figures released this week gives ample evidence of at least a cooling.
• Existing-home sales dropped in June for a third straight month. Purchases of new homes are at their slowest pace in eight months.
• Inventory, which plunged for years, has begun to grow again as buyers move to the sidelines, sapping the fuel for surging home values.
• Prices for existing homes climbed 6.4 percent in May, the smallest year-over-year gain since early 2017, and have gained the least over three months since 2012, according to the Federal Housing Finance Agency.
• Shares of PulteGroup fell as much as 4.9 percent Thursday morning after the national homebuilder reported that orders had declined 1 percent from a year earlier, blaming rising mortgage rates.
This new wariness was noticeable in the latest consumer-sentiment data from the University of Michigan. In its preliminary July survey, 65 percent of Americans said it’s a good time to buy a home, the lowest since 2008, when the economy was still in recession.
The homeownership rate in the second quarter was 64.3 percent, up from 63.7 percent a year earlier, according to U.S. Census Bureau data released Thursday.
Homeownership still remains out of reach for many Americans, especially for first-time and younger buyers. For existing homes, the median price climbed in June to a record $276,900, while properties typically stayed on the market for 26 days, unchanged from the prior three months, according to the National Association of Realtors.

Dianna’s Perspective
I work closely with Titan Homes, a local builder, so I’m familiar with the new construction market in our area.

In the last three months, new construction sales figures were up. The Stanwood-Camano market currently has 31 pending sales; 12 closed in July which is the lowest number in the last four months. Currently, there are 28 active listings.

We saw a decline in new construction after the economic downturn nearly a decade ago. Many of the builders had chosen to leave the industry and find alternate vocations. We’re now on a building uptick with the largest challenge being able to find affordable land to build on as well as subcontractors who aren’t overloaded with work already. Recently, we’ve found ourselves moving off of Camano Island in search of property as there isn’t much development potential left on the island.

All that being said, the buying market is still hot and we’re seeing a lot of people moving into our area. The need for new housing remains high.

Dianna Pence | Windermere Stanwood and Camano Island Broker