Some have also been able to offer incentives such as rate buydowns or other concessions to help homebuyers with higher costs and rates. Kan noted that MBA’s Builder Application Survey (BAS), which gauges loan application activity received from homebuilders for new single-family properties, had registered increases on a year-over-year basis for several months in a row.
In April alone, new home purchase applications were up 22.1% compared with the same time last year, according to the BAS, and 2% over March.
“You have buyers out there who either can’t find a unit that they want or if they find it, it’s hard to compete – or rates are making things much less affordable for them,” he said. “And the ones that are still in the market are turning to the new construction side because it’s slightly less competitive, maybe. But [those builder concessions] are making it a little bit easier.”
Supply challenges long evident in US housing market
The prevalence of homeowners who are choosing to stay in place rather than move because of low rates has only served to intensify supply challenges that have been evident for over a decade, stretching back to the global financial meltdown of 2007-08.
“It really goes back to the great financial crisis. There was overbuilding leading up to that last crisis, which caused an inventory overhang,” Kan said, “and I think coming out of the GFC, you had lots of homebuilders go out of business and the ones that were able to stick it out, they just built a lot fewer homes.
