A Step-by-Step Guide to Financing a Home Purchase

Buying a house is one of the most significant investments you’ll make, and understanding the financing process can make your homebuying journey smoother and more enjoyable. Here’s a guide to help you navigate the steps, from organizing your finances to closing the deal.

1. Organize Your Finances

Save for a Down Payment

Conventional loans typically require a down payment of 5% to 20% of the home’s purchase price. If you put down less than 20%, you’ll need to pay for private mortgage insurance (PMI), which adds to your monthly payments until you build up 20% equity in your home. If you’re buying a second home, you may be able to use equity from your current home to fund the down payment.

Offering a larger down payment can also help you secure a lower interest rate, potentially saving you money over time. Additionally, be prepared for closing costs, which average about 3% of the home’s purchase price and cover fees like loan processing and underwriting.

Review Your Credit Score

Check your credit score regularly to ensure you’re in good financial shape before applying for a mortgage. You can access your credit report through a “soft inquiry,” which won’t impact your score. Later, when you formally apply for a mortgage, lenders will perform a “hard inquiry,” which is a necessary part of the approval process. Multiple inquiries from mortgage lenders within a short time frame are treated as a single inquiry, minimizing any impact on your credit score.

If you’re applying for a loan on a second or vacation home, banks often require a higher credit score and a larger down payment compared to a primary residence loan.

2. Determine How Much Home You Can Afford

How is Your Mortgage Payment Calculated?

Your mortgage payment usually consists of three main components:

  • Principal: The amount borrowed.
  • Interest: The cost of borrowing.
  • Escrow Contributions: Covers property taxes, homeowners insurance, and possibly PMI. Your lender pays these costs on your behalf throughout the year.

If you plan to rent out a second home, factor in additional costs like property management fees, which typically range from 8% to 12% of rental income.

An online mortgage calculator can help you estimate your monthly payment based on different loan amounts, interest rates, and loan terms.

Debt-to-Income Ratio

Lenders evaluate your debt-to-income (DTI) ratio, which compares your monthly debt payments to your monthly income. To qualify for a mortgage, your DTI generally should be below 43%. However, for your own financial stability, aim to keep your DTI below 36%. If you’re purchasing a second home, lenders may require a DTI of 36% or lower.

3. Understand Your Mortgage Options

How is Your Interest Rate Determined?

Several factors influence your mortgage interest rate:

  • Credit Score: Higher credit scores typically qualify for lower interest rates, while lower scores often result in higher rates.
  • Loan Term: Shorter loan terms, like 15 years, usually offer lower rates than longer terms, like 30 years.
  • Federal Funds Rate: When this rate is low, banks borrow money more cheaply and pass those savings on to you through lower mortgage rates.
  • Lender Variability: Different lenders offer different rates, so shopping around can help you secure the best deal.
  • Residence Classification: Loans for primary residences usually have better rates than those for investment properties or second homes.

FHA Loans vs. Conventional Loans

If you don’t meet the requirements for a conventional loan or prefer a smaller down payment, an FHA loan might be an option. These government-insured loans have more flexible criteria but are designed specifically for primary residences—not rental or vacation properties.

Mortgage Insurance

Avoiding PMI requires a 20% down payment. With conventional loans, you can drop PMI once you reach 20% equity. FHA loans, however, often require you to pay mortgage insurance for at least 11 years, depending on your loan details. They also require Up Front Mortgage Insurance (UFMI), which equals 1.75% of the loan amount and can be paid at closing or rolled into the loan.

4. Get Pre-Qualified or Pre-Approved

Pre-Qualification vs. Pre-Approval

  • Pre-Qualification: A preliminary estimate of how much you can afford, based on self-reported financial information.
  • Pre-Approval: Requires detailed documentation of your finances and results in a more accurate loan amount. It’s generally required when submitting an offer on a home.

While both are helpful, pre-approval carries more weight with sellers since it shows you’re a serious buyer.

5. Find a Property and Make an Offer

Once you’re ready to buy, working with a real estate agent can be beneficial. Agents can help you find homes, understand neighborhoods, and guide you through the purchasing process.

A Real Estate Agent Can:

  • Assess your housing needs.
  • Show you properties in your price range.
  • Suggest financing options.
  • Prepare and negotiate purchase offers.
  • Recommend resources like mortgage brokers and inspectors.
  • Manage closing details once your offer is accepted.

Making an Offer

After finding the right home, your agent will help you make a competitive offer based on market conditions and comparable sales. Sellers may respond with a counteroffer, which your agent can help you review and negotiate.

Once your offer is accepted, you’ll sign a purchase contract that’s contingent on conditions like inspections. At this point, you’ll provide earnest money, typically 1% to 2% of the purchase price, which is held in escrow and goes toward your down payment at closing.

Final Steps: Inspections and Closing

Schedule an inspection to identify any necessary repairs. If significant issues are found, your agent can help negotiate repairs or a price adjustment. After all conditions are met, you’ll proceed to closing, where you’ll finalize the purchase and receive the keys to your new home.

Buying a home involves careful planning, but with the right preparation and support, you can make a confident investment.

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New Homes with Patios Reach Record High in 2023

The trend of adding patios to new single-family homes continued its upward trajectory in 2023, setting yet another record. According to data from the National Association of Home Builders (NAHB), sourced from the Survey of Construction (SOC) conducted by the U.S. Census Bureau, 63.7% of approximately 950,000 new single-family homes started in 2023 included patios. This represents a slight increase from 63.3% in 2022 and marks the eighth consecutive year of record growth.

Steady Growth Over the Past Decade

Patios were relatively rare in the aftermath of the 2008 housing crisis, with fewer than half of new homes featuring them between 2008 and 2011. However, by 2012, the share of new homes with patios had jumped to 52.4%, initiating a long-term trend that has continued for 13 of the past 14 years. The only exception was in 2015, when the percentage remained unchanged.

Geographic Patterns in Patio Installation

Despite the increasing prevalence of patios nationwide, the regional trends have remained consistent. In 2023, only 17% of new homes in New England and 20% in the Middle Atlantic featured patios—the lowest percentages in the country. In contrast, patios were most common in the West South Central region, where over 80% of new homes included them. High percentages were also reported in the South Atlantic and Mountain regions, where roughly 70% of new homes came with patios. These geographic patterns align closely with those observed in previous years.

Characteristics and Size of New-Home Patios

The 2024 Annual Builder Practices Survey (BPS), conducted by Home Innovation Research Labs, offers additional insights into patio characteristics for homes built in 2023. Nationally, the average size of a new-home patio is around 290 square feet, though this varies significantly by region. Patios are largest in the East South Central (over 400 square feet) and New England (about 380 square feet), while they are smaller in the West South Central (under 200 square feet) and the West North Central (a little over 200 square feet).

Patio Building Materials: Regional Preferences

In most parts of the U.S., poured concrete remains the dominant material for new-home patios. For instance, over 90% of patios in the East South Central region are built with poured concrete. However, some regional variations do exist. In the South Atlantic, poured concrete and brick pavers each hold roughly a quarter of the market, while New England’s patio market is split among poured concrete, concrete pavers, and natural stone. Meanwhile, brick pavers are the most popular choice in the Mid-Atlantic region, surpassing other materials.

The Outlook for Patios in New Homes

As new home construction continues to prioritize outdoor living spaces, the presence of patios is likely to remain strong. This trend reflects not only consumer demand for outdoor amenities but also a shift in homebuilding practices toward creating more versatile living environments. With patio sizes and materials varying widely by region, it’s clear that new-home design will continue to adapt to local preferences and lifestyles.

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July 2024 Sees Surge in New Home Sales Amid Market Recovery

July 2024 brought an unexpected boost to the new home market, with the U.S. Census Bureau reporting a seasonally adjusted annual rate of 739,000 new homes sold. This was the highest figure seen in fourteen months, significantly surpassing forecasts of 624,000 units. Although sales declined by 10.6% compared to a revised June figure, they were still 5.6% higher than the previous year. This spike follows a pattern of steady recovery since the start of 2023, after a two-year period of retraction following the pandemic-driven peak in late 2020.The room is bathed in natural light from the large window near the freestanding tub, which offers a serene view of the surrounding nature.

Historically, new home sales have seen notable fluctuations, often mirroring broader economic trends. For instance, after the 1990 recession, sales accelerated, peaking during the housing bubble of 2005. A similar trend was observed starting in 2011, with steady growth until the 2020 peak. However, when population growth is factored in, today’s new home sales are 30.2% below the level seen in 1963, despite being 25.0% higher in absolute terms. As of July 2024, the 30-year mortgage rate stood at 6.46%, which continues to challenge affordability for many prospective buyers.

The median price of a new home in July was $429,800, marking a 3.1% increase from the previous month. However, prices were 1.4% lower than in July 2023. When adjusted for inflation, the month-over-month increase stood at 3.0%, while the year-over-year drop extended to 4.2%. This underscores the persistent volatility in home pricing, as demand fluctuates in response to economic conditions and mortgage rate trends.

Despite the positive sales numbers, experts urge caution. The National Association of Home Builders (NAHB) pointed out discrepancies between the Census Bureau’s optimistic sales figures and the NAHB/Wells Fargo Housing Market Index, which showed weakness in builder sentiment. The NAHB also highlighted that while mortgage rates dipped slightly in July, ongoing affordability issues and higher construction costs remain obstacles. There is optimism, however, that easing monetary policies and falling interest rates could drive further improvements in the homebuilding sector.

New home inventory in July decreased by 1.1% from the previous month, with 462,000 units available, translating to a 7.5-month supply at the current sales pace. This inventory level is above the typical balance point of six months but still reflects tight availability when considering both new and existing homes. Regionally, the Midwest experienced the largest year-to-date sales growth at 22.1%, followed by the West at 6.1% and the Northeast at 5.4%, while the South saw a 2.4% decline.

In summary, July 2024 marked a key turning point for new home sales, offering hope for continued recovery in the housing market despite persistent affordability challenges and volatility in builder sentiment.

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The Timeless Appeal of Butler’s Pantries: From Victorian Origins to Modern Functionality

What is a Butler’s Pantry?

A butler’s pantry, sometimes referred to as a scullery, is a small, transitional space between the kitchen and dining room. Traditionally found in larger homes, these rooms are gaining popularity among modern homeowners for their practicality and charm. Butler’s pantries serve two primary functions: storage and staging. They are ideal for hiding kitchen items such as fine china, silverware, and small appliances that homeowners might want to keep out of sight, particularly in open-concept homes. Beyond pantry staples, butler’s pantries can store table linens, wine glasses, and cooking supplies, creating an organized, clutter-free kitchen.This beautiful well appointed butler's pantry with a nice mirrored custom backsplash and dark custom cabinets.

Additionally, the butler’s pantry functions as a prep space for meal staging. Many butler’s pantries are equipped with countertops, making them an ideal spot to prepare food or store dishes before serving. They help keep the main kitchen area free for cooking while minimizing foot traffic. Homeowners often use these spaces to house coffee makers, wine, and other beverage-making appliances, freeing up valuable counter space in the kitchen itself.

The Evolution and Modern Use of Butler’s Pantries

The butler’s pantry originated during the Victorian Era (mid-1800s to early 1900s) in England, when wealthy families employed butlers to manage their homes. The pantry was not only a storage area but also served as the butler’s office, where they kept inventory of wine and other valuable items. This room allowed the butler to oversee the family’s dining needs while having their own space near the kitchen and dining areas.

Today, butler’s pantries remain popular even though most families no longer employ butlers. They have evolved to become a key feature in many modern homes, offering much-needed storage and counter space. With more than 60% of homebuyers expressing interest in this feature, it is clear that butler’s pantries continue to meet the needs of modern households. They help reduce clutter, organize appliances, and enhance kitchen functionality. Homeowners are increasingly incorporating butler’s pantries into their kitchen designs, recognizing the value of this timeless space.

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The Rise of Slab Foundations in New Home Construction

In 2023, the construction landscape for new single-family homes saw a significant shift towards slab foundations, marking a clear trend in residential building practices. According to an analysis by the National Association of Home Builders (NAHB) based on data from the Survey of Construction (SOC), slab foundations became the dominant choice, with 72.4% of new homes built on this type of foundation. This represents a steady increase from 45.8% in 2000, highlighting a growing preference for slabs over the past two decades.

The most notable change occurred between 2022 and 2023, with the share of new homes built on slabs jumping by 3.9 percentage points—a significant rise compared to the average annual increase of 1.93 percentage points over the previous five years.

Decline in Basements and Crawl Spaces

As slab foundations gained popularity, the share of homes with full or partial basements continued to decline. In 2023, only 16.6% of new single-family homes were constructed with basements, down from 19.6% in 2022, marking a 3 percentage point decrease. Additionally, homes built with crawl spaces have become increasingly rare, with just 9.9% of new homes utilizing this foundation type in 2023.

Regional Preferences: Climate and Building Codes Drive Foundation Choices

The choice of foundation type is heavily influenced by regional climate and local building codes. In colder regions, where building codes require foundations to extend below the frost line, full or partial basements are the preferred choice. These basements not only comply with frost line requirements but also provide additional finished floor space at a relatively low additional cost. The regions with the highest percentage of new homes built with basements in 2023 include the West North Central (63.9%), New England (62.1%), Middle Atlantic (48.1%), and East North Central (48%) divisions.

In contrast, in warmer climates where the frost line is not a concern, slab foundations are favored for their cost-effectiveness and simplicity. Slab foundations are particularly prevalent in the West South Central (96.9%), Pacific (86.5%), South Atlantic (83.3%), and Mountain (52.9%) divisions.

The trend towards slab foundations in new home construction reflects broader changes in building practices, driven by factors such as climate, cost, and regional building codes. As these trends continue to evolve, slab foundations are likely to remain a popular choice, especially in warmer regions, while basements will continue to be favored in colder areas where they offer both practicality and added living space.

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The Benefits and Role of Homeownership in Wealth Accumulation

Homeownership provides numerous advantages to households, offering not only a stable living environment but also a valuable opportunity to accumulate wealth over time through the building of equity. By 2022, 66.1% of U.S. households were homeowners, highlighting the significance of homeownership in American life. For those who owned homes, the median net housing value (the value of the home minus any home-secured debt) saw a substantial increase from $139,000 in 2019 to $201,000 in 2022, driven by rising home prices and relatively stable mortgage debt.

This article delves into the findings from the 2022 Survey of Consumer Finances (SCF), a detailed triennial survey of U.S. family finances conducted by the Board of Governors of the Federal Reserve System. Unlike the quarterly Financial Accounts of the United States, which provides aggregated data on household balance sheets, the SCF offers granular, family-level insights into household finances, collected every three years since 1989.

Homeownership: A Key Component of Household Wealth

Homeownership plays a critical role in wealth accumulation for households. According to the 2022 SCF data, the primary residence continues to be the largest asset category on household balance sheets. In 2022, the total value of primary residences across the U.S. stood at $40.9 trillion, accounting for over a quarter of all household assets. This figure surpasses other significant asset categories such as business interests (20%, $30.8 trillion), other financial assets (19%, $29.8 trillion), and retirement accounts (15%, $23.8 trillion).

The primary residence not only represents the largest asset category but is also widely held by households. In 2022, approximately 66% of households owned a primary residence. In contrast, just over half of households (54%) held retirement accounts, and 21% owned stocks or bonds. Other financial assets, such as checking accounts, money market accounts, and prepaid debit cards, were held by 99% of households, serving more for transactional purposes than wealth accumulation.

Wealth Distribution Across Age Groups

The total value of assets varies significantly across age groups. In 2022, households under the age of 35 held assets totaling $7.6 trillion, while households aged 65 or older held assets valued at $65.9 trillion. This stark difference illustrates how the value of assets typically increases with age.

The composition of assets on household balance sheets also changes with age. For households under 65, the primary residence is the largest asset category. However, for those aged 65 or older, other financial assets surpass the primary residence as the largest asset category. Although the value of the primary residence increases with age, its share of total assets decreases, reflecting a shift toward other asset categories such as stocks, bonds, and retirement accounts.

The Impact of Educational Attainment on Wealth

Educational attainment is closely linked to the value of assets held by households. Households with a bachelor’s degree or higher hold assets valued at five times those held by households with some college or an associate degree.

While the primary residence remains the largest asset category across all educational levels, its share of total assets varies. For households with a bachelor’s degree or higher, the primary residence represents 23% of total assets, with significant holdings in business interests, other financial assets, and retirement accounts. In contrast, for households without a high school diploma or GED, the primary residence accounts for half of their total assets.

In conclusion, homeownership is a cornerstone of wealth accumulation in the U.S., with its importance varying across different age and education groups. As households age or achieve higher educational levels, their asset portfolios diversify, reflecting broader opportunities for wealth building beyond homeownership.

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Tips and To Homebuying in Today’s Market

Last year may be remembered as a correction period in real estate history. After a pandemic-driven seller’s market, marked by bidding wars, inventory shortages, and skyrocketing prices, the housing market began to cool down in 2022. The impact of inflation and rising interest rates dampened buyer enthusiasm, slowing sales and decelerating price appreciation.

This shift made 2023 a transitional year, and now in 2024, inflation is much lower, but home prices and mortgage rates remain high. Sellers still hold an advantage in many areas due to continued housing scarcity, and no one anticipates a dramatic market crash. However, many analysts predict a shift towards a more balanced market, which would benefit buyers.

Regardless of the economic climate, buying a house can be an exciting and emotional process. Before starting your search, ensure you understand the ins and outs of homebuying to make the best decisions for your family and wallet. Here’s a step-by-step guide to help you navigate the process.

Purchasing a home is a major decision that shouldn’t be taken lightly. Clarify your personal and financial goals first. “Buyers should think about when they intend on moving and what they want in a home—amenities, ideal location, and how long it could take them to save for a down payment,” says Edwence Georges, a real estate agent with RE/MAX in Westfield, New Jersey.

Your credit score plays a crucial role in determining your financing options; lenders use it to set loan terms and rates. The higher your score, the lower the interest rate you’ll be eligible for—lower scores equate to more expensive mortgages. Obtain your credit report and score from the three major credit reporting agencies, Equifax, Experian, and TransUnion, for free once a year. If you find any discrepancies, report them to each agency.

To avoid paying private mortgage insurance (PMI), you’ll need to put down at least 20 percent of the home’s purchase price. Some lenders offer mortgages without PMI with lower down payments, but expect higher interest rates. Research different loan types and government programs that help cover down payment costs for qualified buyers.

Setting a realistic budget for your new home is essential. Consider all expenses to determine what you can afford long-term. “Buyers tend to forget to factor in other costs, like homeowners association fees and maintenance,” says Paige Kruger, Realtor and founder of Signal Real Estate in Jacksonville Beach, Florida.

Getting preapproved for a mortgage gives you a clearer picture of how much you can afford and strengthens your offer when bidding on a house. Shop around with at least three lenders or a mortgage broker to increase your chances of securing a low interest rate.

An experienced real estate agent can save you time and money by helping you find the right home and negotiating with the seller on your behalf. Contact several local agents to discuss your needs before choosing one. “Someone with knowledge of an area can tell if your budget is realistic and point you to adjacent areas or other considerations,” Kruger says.

While viewing listing photos online is helpful, nothing beats visiting homes in person and exploring the neighborhood and its amenities. Be specific with your agent about the types of homes you want to see, and prioritize must-haves over nice-to-haves.

Understanding how to make an attractive offer on a home can increase your chances of acceptance. Work closely with your agent to prepare a complete offer package, including your offer price, preapproval letter, proof of funds for a down payment, and any terms or contingencies.

A home inspection provides an overall picture of the property’s condition and any issues it might have. Major problems might require the seller to make repairs or offer a credit. Your agent can recommend a home inspector and help you negotiate necessary repairs.

Final loan approval requires maintaining your finances and credit during the underwriting phase. Avoid opening new credit lines, making major purchases, or changing jobs before closing. Respond promptly to lender requests and keep your paperwork organized.

A final walk-through is your last chance to address any outstanding issues before taking ownership. Bring your home inspection checklist and repair invoices to ensure everything is in order.

Once all contingencies are met and your lender clears the loan, it’s time to close on your new home. Review your closing disclosure three days before the closing date, which outlines your loan details. Attend the closing with your real estate agent, and after signing the paperwork, the home is officially yours.

Traditionally, spring is the peak homebuying season, but your financial readiness is more critical than the time of year. Despite recent high mortgage rates and home prices, buying a house now could be a good move if you’re financially stable. If your savings are tight or your credit score needs improvement, it might be better to wait.

Be cautious when buying near the market peak, especially if you plan to stay in the home for only a few years. “Bargain aggressively and be willing to walk away,” advises Ken H. Johnson, a real estate economist at Florida Atlantic University.

Each housing market has its own quirks. Partner with a knowledgeable local agent who understands the intricacies of their market to navigate these challenges effectively.

The down payment is often the largest upfront homebuying expense, but there are additional costs like closing fees, property taxes, home insurance, and maintenance to consider. Budget carefully to ensure you can afford these long-term expenses.

Understanding these steps and working with professionals can make your homebuying journey smoother and more enjoyable.

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The True Value of Homeownership Beyond Financial

With all the headlines and discussions about housing affordability, it’s easy to get caught up in the financial aspects of buying a home. It’s natural to focus on the dollars and cents involved. However, while it’s essential to afford the home you purchase, don’t lose sight of why homeownership was significant to you in the first place. Buying a home is much more than a financial transaction. As the National Association of Realtors (NAR) states, “The benefits of purchasing and owning your place of residence are both financial and emotional – pride in homeownership and the feeling of security are huge intangible benefits.”

Here’s a look at just a few of those more emotional or lifestyle perks, to help anchor you to why homeownership is one of your goals. Owning a home is often linked to better mental health and well-being. This is likely because buying a home is a major milestone. The sense of satisfaction and pride that comes with achieving this goal feels great. A recent article from the Mortgage Reports notes, “By and large, homeownership brings more satisfaction than renting. Surveyed homeowners reported an overall happiness level of 88% compared to 67% for renters.”

Homeownership also brings stability, allowing you to put down roots. If you’re used to moving every time your lease renews and rent increases, staying put for a while benefits you and your loved ones. A home provides predictability and the chance to build long-term friendships, reducing stress for everyone. As NAR explains, “Families also benefit from homeownership, with studies proving that parents are able to spend less time in a stressed state, therefore spending more time with their children. The ability for parents to feel stable has a huge impact on children’s behavioral issues, educational success, and future economic success.”

Homeownership also fosters a sense of belonging. As FinHabits states, “Homeowners tend to be more involved in their local communities, leading to a stronger sense of belonging.” Your home connects you to your neighborhood and community, giving you a stake in its future. This naturally leads to more involvement and a desire to help improve the area while building long-term relationships with neighbors.

Finally, your home is a place that’s all yours. Unless you have specific homeowner’s association requirements, you can customize it however you like. If renting has limited your ability to express yourself, homeownership allows you to embrace the latest trends. Whether it’s small home improvements or major renovations, your house can evolve with your tastes and lifestyle. Imagine coming home each day to a place that feels uniquely yours—there’s no feeling like it.

If you want to enjoy a sense of accomplishment and pride in your living space, connect with a real estate agent to discuss what you need to do to make this future a reality for you.

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Green Building Practices: Building Sustainably

This inviting entryway features elegant wainscoting in a soft green hue, complementing the white walls and door.

Builders were surveyed on how frequently they implemented seven categories of green building practices, whether the home was certified green or not. The leading practice in new homes was energy efficiency at 91%, followed by water efficiency at 52%, and healthier indoor living environments at 49%. For remodelers, the top three practices were energy efficiency (86%), healthier indoor living environments (51%), and water efficiency (49%).

Energy Efficiency

Energy efficiency was the most commonly used category. Builders reported on specific energy efficiency practices they used in more than 50% of homes. The top practices included the installation of green efficiency products, blower door testing, above-code energy programs, installing ducts in conditioned spaces, and targeting air leakages.

Renewable Energy

Builders were also asked about their use of renewable energy sources in more than 50% of their projects. Overall, renewables were not frequently used. Geothermal systems were the top renewable energy solution at 11%, followed by onsite solar energy at 10%. Regional differences were notable, with 31% of respondents from the West using solar energy systems, compared to 21% in the Northeast, and only 3% in the Midwest and South.

At the utility level, renewable energy use was more promising. Over half of the builders (55%) sized electrical panels to accommodate EV chargers, and 40% provided a charging outlet in more than half of their homes. Additionally, 25% of respondents built more than half of their homes to be all-electric, and nearly 19% designed all their homes for eventual all-electric use. There was no significant difference in the level of green engagement for all-electric homes.

Water Conservation

Water conservation was another top category for green building practices. The most common practice used in more than half of homes was installing water-conserving plumbing fixtures and faucets (87%). This was followed by water-conserving appliances (74%), tankless water heaters (65%), and efficient plumbing techniques (64%). Water conservation practices outside the home, such as drip irrigation, drought-tolerant landscaping, and rainwater collection and reuse, were used less frequently, with each below one-third.

Conserving Materials and Resources

Sustainable construction also involves conserving materials and resources. Builders were asked which material and resource conservation practices they used in more than 50% of their projects. Minimizing construction waste during design and construction was the most popular response at 78%, followed by using prefabricated components (such as panels and trusses) at 64%. Diverting construction waste from landfills was used less frequently at 35%.

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Considering a Move? Here’s Why You Should Think About Newly Built Homes

A black-framed glass door suggests a transition from the exterior to the interior space, blending classic and modern design elements.

 

When planning a move, it’s normal to wonder where you’ll end up and what your future home will look like. You might have a specific vision in mind, but unless you started out knowing you want a newly built home, you may not have considered new home construction. Here are two reasons you might want to reconsider:The patio opens up to a backyard bordered by natural greenery, enhancing the outdoor living experience.

1. Adding Newly Built Homes Could Give You More Options

There are two types of homes on the market: new and existing. A newly built home refers to a house that was just constructed or is under construction. An existing home is one a previous homeowner has lived in. Currently, the inventory of existing homes is tight, but there may be more options for you among new homes.

Data from the Census Bureau and the National Association of Realtors (NAR) shows that newly built homes make up a larger part of today’s housing inventory than usual. From 1983 to 2019 (the last normal year in the market), newly built homes constituted only 13% of the total inventory of homes for sale. Today, that number has climbed to over 33%.

Rest assured, despite an increase in new construction, there’s still a significant housing shortage overall. But for you, the uptick in new builds means more options in your home search.

2. Newly Built Homes May Be More Affordable Than You Think

You might wonder if a new build could really be an option for you, especially if you’ve previously dismissed them as too expensive. However, the price gap between newly built homes and existing homes is shrinking. Here’s why.

Builders are responding to current market demands, focusing on constructing smaller, potentially more affordable homes.

“In the past, newly built homes have been much more expensive than existing homes, but that gap has been getting smaller recently. In some places today, the cost to build versus buy is roughly the same.”

An article from CNBC supports this:

“While new builds are still sold for slightly more than existing homes, the price gap has significantly narrowed.”

Moreover, some builders are offering price cuts and mortgage rate buy-downs to make new homes more attractive. There are many reasons why new builds may be worth considering today. As Freddie Mac notes:

“As the supply of existing homes for sale remains low and home prices continue to rise, more buyers are choosing to purchase new homes than in previous years.”

However, buying a newly built home isn’t the same as buying an existing one. Builder contracts come with different fine print. Partnering with a local real estate agent who knows the market, builder reputations, and contract details ensures you have an expert on your side.

If you want to find out what builders are doing in your area, connect with a real estate agent. If you’re open to expanding your search to nearby towns, your agent can help you explore even more options.

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