Best season to build and buy a new construction home and what you need to know
For everything there is a season. We look forward to Farmers’ Markets where we can get fresh tomatoes rather than purchase out of season mealy fruit. And we know that Mother Nature has seasons. When it comes to new construction homes, is there a seasonal alignment to home sales and development?
RealtorsⓇ will tell you that there are definite seasons to home buying. As opposed to being driven by Mother Nature, they are determined to human factors.
Typical real estate market buyer driven seasons
Traditionally, there are two distinct surges in the volume of buyers in the market for new construction homes and resale homes. These are spring and late fall.
What drives the seasonality of new homes real estate market?
The spring market is built around family / school life. Parents being relocated by their employers frequently move during summer vacation when school is out. This allows the family to get resettled and get their children enrolled in school and find a routine. Generally, sellers evaluate their options and plan to list homes by March, expecting that a house will go under contract and sell by May with a closing in early June.
The fall market is also in direct response to school schedules. Buyers are active in the market beginning in October if they want to close on a home in order to relocate their family before the midwinter break and the resumption of school in January.
You will find new home builders may offer more incentives during off-peak seasons when there are fewer buyers in the market. During peak season incentives are scarce.
Permits for land development and construction propel new home builder market seasons
New home construction operates on an extended schedule. Experienced new home builders know that they may have 18 months of permitting and infrastructure work before they ever show a lot. Therefore, when they purchase land, they project ahead and try to time the opening of a new community with seasonal market demands. It’s rather like the gestation of an elephant — which is about 20 months.
Bringing lots to market means permits have to be issued for land development to allow the builder to begin the neighborhood. Then they must also gain permits to grade lots and install infrastructure such as sewerage or natural gas lines and underground electricity. During this prep period, builders are having plans designed to fit the lot dimensions or selecting which of their existing plans will fit the lots as surveyed for the community.
Builders will hold grand openings and unveiling of new community plans in summer and spring, to build market awareness and heighten demand. Often builders will begin growing awareness with teaser marketing campaigns months in advance of the actual sales opportunity. If you are going to purchase a new construction home, keep your eyes open for these Coming Soon neighborhoods if you want to get in early.
Lot offerings may not follow seasonal demands
When a new home development opens for sales, groups of lots will be released to agents and contracts are accepted. Periodically, as demand requires, new groups of lots are released. Lot or section openings may or may not align with the typical real estate buying season. Often a builder will hold premium sections and groups of lots for later in the build out, increasing the desirability of them. As a neighborhood matures, premium lot releases drive demand. As you evaluate where you want to live, you should take into account the stage of maturation a community is in as this drives lot and home pricing.
Community driven events tied to new neighborhoods
Smaller new construction home builders and new community developers frequently team up, with developers selecting and offering homes from these local builders. Rather than meeting specific buyer seasons, they may release lots in conjunction with big events in the greater community, such as the opening of a new neighborhood school or the announcement of a new industrial or manufacturing plant like Boeing or Volvo USA.
Builders whose communities have large amenity plans often will have special marketing seasons built around the opening of the community swimming pool, fitness center or athletic fields.
Publicly traded companies have their own seasons
Volume home builders such as national companies {i.e. Beazer, DRB Homes, Lennar, and Pulte Homes} have seasons which are tied to their corporate fiscal year. As with a seasonal calendar, they are divided into quarters. However, rather than representing Winter, Spring, Summer and Fall, they represent times when the indexed companies announce milestones to investors and stockholders. Publicly traded new home construction companies have pressure to meet sales quotas. Purchasing at the end of the builder’s corporate fiscal year sometimes means great savings.
Buyer leads in any season
No matter when you choose to purchase your new construction home, you should expect a process that revolves around you, the buyer. Because without you, there is no need for new construction homes. So, be aware of real estate buying seasons, do your homework about new home communities debuting in the market and go find your own new home.
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