New Construction and the Return of the Starter Home

2 Construction workers building a new home

It’s certainly no secret that housing inventory has been tight in recent years. The problem has been especially apparent at the lower end of the market which, according to, has seen an 18% drop in home listings over the year.

It has left millennials and other younger buyers struggling to find properties that meet their budget constraints — and sometimes to even find properties in their area at all.

Fortunately, it seems there might be some help on the way. Let’s take a look at the latest data that might spell some relief for desperate first-time homebuyers in 2020.

Room for Optimism

What’s the first piece of evidence that more starter homes may be on the horizon? That’s simple. Some of the country’s biggest home builders have come out and outright said it: they’re looking to build more entry-level homes this year. 

Lennar’s CEO told listeners on the company’s Q3 earnings call that it’d be upping production on homes aimed at first-time buyers. And major competitor D.R. Horton? If it continues on last year’s path, which saw 68% of all its homes sold priced under $300K, then there’s certainly something for buyers to be optimistic about.

There’s also recent data that shows a downtrend in overall home size when it comes to new construction. According to the U.S. Census Bureau and the National Association of Home Builders, the number of new builds with four bedrooms or more has been moving downward. Overall square footage is decreasing, too. Both indicate that builders are focusing more on the entry-level end of the market, which typically trends toward smaller properties and less square footage on the whole.

More Good News

Though it doesn’t pertain to entry-level homes specifically, there’s more good news in the construction sector: Builders are more confident than they have been in a full decade, according to a survey from the NAHB. 

Construction employment numbers, as well as recent housing starts and building permits, reflect this optimism, too. According to the Bureau of Labor Statistics, residential building permits were up 11% over the year in November, while housing starts jumped 13.6%. Overall housing completions jumped another 7% over November 2018.

Looking to Buy Your First Home?

It seems signs are pointing toward more listings for first-time buyers this year. Do you want to buy your first home in 2020? Then get in touch with an Embrace Home Loans mortgage specialist today and get pre-approved for your mortgage before you shop.

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Aly Yale

Aly J. Yale is a freelance writer focusing on real estate, mortgage, and the housing market. Her work has been featured in Forbes, Bankrate, The Motley Fool, Business Insider, The Balance, and more. Prior to freelancing, she served as an editor and reporter for The Dallas Morning News. She graduated from Texas Christian University's Bob Schieffer College of Communication with a major in radio-TV-film and news-editorial journalism. Connect with her at or on Twitter at @AlyJwriter.