This article examines the current housing market and how low inventory is impacting real estate builders. As home prices continue to rise and the demand for housing remains constant, the availability of homes is continually decreasing which is having a positive effect on the profits of real estate builders as sales increase.

The U.S. Census bureau reported that new residential home sales for the year-over-year measurement increased by 4.3%. This is despite the fact that new housing permits have remained relatively flat since October 2019 and have only decreased by 1.2% since February, coinciding with the full impact of the COVID-19 pandemic. Experts cite lack of inventory as the primary cause for the continued success of real estate builders. As the demand for housing continues to outpace the supply, affordability has become an issue for a large percentage of buyers.

Newly built homes in some markets are selling at premium prices due to limited availability. Real estate builders are capitalizing on this increased demand, with many of them taking on more new projects due to the high demand and low interest rates. Building and development firms have seen significant profits as the price per square foot has risen alongside the demand. In the past couple of months, the median sales price of an existing home was recorded as $318,000, where the median price of a new home was around $370,000. While this may make the prospect of owning a home challenging for first-time buyers, it is providing a much-needed boost for the industry.

Overall the current housing market is very favorable for real estate builders. Low inventory is generating higher prices and increased profits, and the continued demand for housing is driving new residential home sales. The success of the industry is tied closely to the availability of homes and personal financial situations, but at this time, both are in good favor of the real estate market.

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