TW: What’s driving the current boom in new homes?
DL: As you know, everything in our business is driven by supply and demand. Right now, demand is high, but the supply of existing homes is low, so many potential buyers are turning to new homes. Another factor driving this increased demand is household formation, which ran at historically low levels during the downturn. These numbers are now picking up substantially and are expected to exceed more than one million in 2013 and into the future.
We also have an increase in population growth as immigration continues, with a large number of these individuals and families buying homes in their first year. Some of these are homes that house multi-generational families, creating a demand for housing designed to meet their needs.
At the same time, these factors are driving increased demand from buyers; we’ve been experiencing a shortage of inventory in many markets across the nation. Although we expect more sellers to come back into the market over time, there is an undeniable need for builders to pick up the pace and deliver more housing of numerous styles and price points. The dramatic increase in housing starts we’ve seen over the last several quarters are clearly substantiating this—and demonstrating the beginning of a new-homes boom.
TW: How does new construction impact the overall real estate market?
DL: New-home business has always been important for resale—there’s clearly a relationship between the two. Our ability to help buyers across both areas attracts more buyers overall. Think about buyers today who are throwing their hands up in the air, frustrated because they can’t find existing homes to meet their needs. They’re competing with multiple offers and investors coming in with cash. In many markets we find very tight inventory, so new homes offer a compelling alternative.
