New residential construction way up in Wake County

Local

The inventory of homes for sale in the Triangle is low, but new residential construction continues to outpace last year by a wide margin.

Through November, the price tag of new residential projects underway in Wake, Franklin and Johnston counties since the beginning of 2017 reached $3.2 billion, according to a report from Dodge Data and Analytics. That’s a 28 percent increase over the same time period last year, which saw just $2.5 billion.

But despite the increase in new construction, the inventory of homes for sale remains low in the Triangle. By the end of last month, new home listings were up 1 percent in Wake County compared to 2016, according to the Triangle Multiple Listing Services. And for the month of November, the county had just two months of housing supply on the market, which is significantly below what is considered market equilibrium for housing inventory: six months.

The seemingly conflicting narratives — of low inventory and big increases in residential construction — show just how great the disparity and the demand is, says Linda Craft of Craft Residential.

“When the recession hit, they reduced the number of new housing starts by almost 50 percent for several years because the banks weren’t lending any money,” Craft says. That has put the region in a hole, and new construction will likely continue to increase year-over-year without really changing the inventory situation. “You’re going to see those numbers high for a long time, and they need to be high for a long time.”

Craft’s main concern is that the new homes being built will tilt more toward the luxury end of the market because the price of land is so high. That will drive down the cost of existing luxury homes, she says, making them more difficult to sell, and it won’t fill the Triangle’s biggest need: lower-priced housing.

Article by Ben Graham/Staff Writer of Triangle Business Journal (https://www.bizjournals.com/triangle/news/2017/12/29/new-residential-construction-way-up-in-wake-county.html)