LEXINGTON, SC – November 1, 2008 – While a decline in existing, specifically, starter to mid-level, homes continues to show slow improvement on a regional and national level, a marked increase in pre-sold custom built homes appears to be on the rise. Stabilized and, in many cases, lower building material costs, coupled with lower interest rates offered by eager to lend financial institutions may be part of the reason.
According to Todd Lewis, Senior Account Representative with 84 Lumber Company, “Lumber composites (which include pine, spruce, and fir) have dropped over 34%. Panels (plywood) have dropped over 12%. The overall lumber market has changed very little over the past 24 months. With lumber on a ten year low and little change in the market recently, one would tend to rationalize that drastic price decreases are not on the horizon.” “In combination with competitive quality labor prices, readily available lots, record low interest rates, and a down lumber market, now is the perfect time to build a home not only as everyone dreams of but also as a sound investment,” added Lewis.
“I have experienced more demand for large, high-end custom homes in the last three months than I had in the last two years combined,” said local builder Steve Baudo, Owner of Baudo & Associates Home Builders, Inc. “We typically focus our efforts on homes starting around the $400,000 and up, but lately the bulk of interest seems to be in the million dollar plus range.” “We just started one large project, and are planning one new large custom order each month from now through February, the smallest of which is around 6,500 square feet,” said Baudo. “Additional clients are simply waiting on their final plans from their architects, and as they bring them to us our pipeline should be filling up,” he added.
Pre-sold custom homes are never listed with the Multiple Listing Service, (MLS), and do not show up in the statistical data available when reviewing market trends and new home sales. Some building materials and components are still slightly higher than a year ago, such as shingles and appliances, but overall the cost of building a new home is at its lowest point in years.
Other gains in housing are being realized as well. Sales of newly built single-family homes turned upward in September, posting a 2.7 percent gain to a seasonally adjusted annual rate of 464,000 units, according to U.S. Commerce Department numbers released October 28, 2008. The report also indicated that builders are making substantial progress in winnowing down the months’ supply of unsold units on the market.
“It’s great to see some upward movement in new-home sales, particularly in light of the strong efforts that home builders have been making to bring supply and demand back into balance by limiting new construction and offering substantial price- and non-price incentives on already-built units,” said NAHB Chairman Sandy Dunn, a home builder from Point Pleasant, W.Va.
“In my opinion, people who have the financial ability, armed with the knowledge of cost savings realized through lower construction and financing costs understand that they can get more bang for the buck now rather than waiting. As the rest of the housing market starts to recover, construction costs will most certainly rise again. For someone thinking about building in the next twelve to twenty four months, it just makes sense to act now rather than wait and pay thousands more for the exact same house, with the exact same features,” said Baudo.