About the last thing house-hunters need is additional time pressure—but there are reasons why this spring’s future homeowners may imagine they can hear a faint tick tick tick as they comb through the listings. If they’ve been tracking the national media, the rise in asking prices is nothing new. Combined with the upward creep of mortgage interest rates, the slow and steady climb in the monthly mortgage payments they can expect is creating a practical reason why acting sooner rather than later seems increasingly prudent.
The recently released Eye on the Economy from the National Association of Home Builders did little to alleviate that suspicion. The article spelled out some of the factors that affect more than just listing prices for newly built homes. As the demand for housing in general increases, new and existing home markets affect one another—and both respond to the nationwide shortage of inventory.
Builders Have More Expenses
The builder-specific issues are increasing. Lumber costs “are now nearly 200% higher” than they were a year ago—a factor that alone adds approximately $24,000 to the price of a typical new house. Supply chain issues have added another speedbump: nine out of ten builders report costly delays in appliance deliveries. That may seem like a minor snag, but it’s one that becomes serious when you think about moving into a new home without a dishwasher or washing machine. Added to widespread shortages in the availability of lots to build on is a shortage of skilled labor to do the building. The result is a further slowdown in homes available for move-in—and new home prices headed skyward.
Time is Not on Your Side
The NAHB calculates that the negative impact on affordability will continue to mount: each $1,000 increase in home prices causes another 154,000 households to be priced out of the market. It’s no wonder that some of this spring’s buyers may feel more than the usual degree of urgency when they comb the listings. If you are on the fence, it’s time to get off and find a house!