Oden Home of RI is a custom home construction company founded in 2003. In the following article, Oden Home reviews the market for custom homes, exploring the outlook for the industry with regard to demand heading into the next year.
As August continues, custom home construction remains strong throughout the country, with builders remaining positive as evinced by the data provided by the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI).
Rising from 55 to 56 in June, the index experienced its seventh consecutive month where the overall outlook increased and marks the highest level since the same time last year, beating the previous high that occurred in May 2023.
According to last month’s data, Oden Home reviews that US home building activities increased over June by 3.9%, helping housing starts reach a seasonally adjusted annual rate of 1.452 million, exceeding market expectations. In fact, it exceeded that of July 2022 by a whopping 5.9%.
Oden Home RI Discusses How Market Strength Generates Enthusiasm
The demand for custom builds in Rhode Island has been particularly strong this year. Couple that with the current tight supply of existing homes and the scale has tipped in the favor of new projects.
Oden Home notes that the limited number of resale inventory means buyers who aren’t priced out of the market are seeking constructions in larger hoards. This, of course, means the market itself is in a fantastic position — and with room to grow some more.
Echoing such statements are other industry experts who report that the increase in new housing development displays optimism from builders’ perspectives.
The Resale Home Shortage Gives Newly Built Homes Increased Market Share
It’s no secret that existing home sales are down sizably due to the immediate supply being about half the level the country experienced in 2019. However, that’s a big positive for homebuilders and custom developers — newly built homes are selling at a pace akin to pre-pandemic speed due to the abundant inventory.
Oden Home RI says, for instance, newly built home sales in May increased by a big 13% leap compared to April, representing a 20% higher level than that of May 2022, as the US Census Bureau data suggests.
Despite the median price being 7% lower than the same time last year, CNBC experts note that may be skewed by the mixture of homes actually selling.
Permits for Future Construction Remain Up
Most Federal Reserve officials mention that there shouldn’t be any more rate hikes, as per a Reuters report. Only one or two extra quarter-point raises are in order. So, rate-sensitive sectors like housing are showing upward momentum in a variety of categories, including permits.
Earlier this year, permits for future builds rose by 5.2%, reaching the highest level since October. Leading this charge was a huge 27.1% surge in the Northeast region.
As for single-family projects, these permits went up by 4.8%, while multi-family constructions went up 7.8%. The former represented a 0.6% increase from the month before.
Oden Home reviews that it is worth noting that permit numbers remained distinctly flat in July, gaining a mere 0.1% gain, reaching a seasonally adjusted annual rate of 1.442 million. While this was lower than professionals’ expectations, custom builds are maintaining their strength regardless.
All This Optimism is Reflected in Stock Prices
The strength of the custom home construction market can even be seen in the stocks.
Oden Home RI reports that a recent filing uncovered that Warren Buffett’s Berkshire Hathaway betted on US home builders last quarter. As a result, the home builder stocks got a much-appreciated boost.
The above-mentioned company disclosed brand-new stakes in the likes of NVR, D.R. Horton, and Lennar inside the securities’ filing.
Experts Say Custom Home Construction Will Aid US Economic Growth
Oden Home RI says that with all that positivity in mind, Bill Adams, the chief economist at Comerica Bank, stated that home construction is on track to add to the country’s economic growth during the remaining six months of the year.
And even though Huey mentions a few things that could be pulling builder sentiment downward over the next few months, such as a lack of buildable lots (especially for larger homes) and continuing material shortages, she emphasizes that the aforementioned short supply of resale inventory keeps new and custom homes on a strong rise — and builders optimistic about the future of the market.