Make sure you’re eligible to be paid for your buyer purchasing a new construction home

Matthew Tennyson
Green Valley Sales Manager
Tierra Antigua Realty


Economists often study the new home market for trends and indicators as to the strength of the economy. The real estate community should and must do the same as new home sales are a vital part of our industry and dictate in part how we as agents conduct business.  

From a macro level, new home sales have a wide-ranging impact on our economy. Lumber, concrete, and other raw building materials directly affect the commodities markets and supplier stock prices. In turn, the supply chain disruptions are front page news and the extreme impact of these impediments cannot be ignored. Further, the availability of labor, local contractors and local vendors, all which are necessities for construction, have a distinct financial impact on our real estate market. The current production cost of one new build, is greatly multiplied in our local economy and its impact far exceeds the final sales price of the same home. 

It is evident, and always has been, that the new home segment is important to the health of our local and national economy. A looming question is, how is that industry currently trending? 

In November of 2022, housing starts in the US edged 0.5% lower to a seasonally adjusted annualized rate of 1.427 million, after falling by a downward revision of 2.1% in October, and compared to market forecasts of 1.4 million.

Single-family housing starts declined 4.1% to a rate of 828K while the rate for five or more unit buildings jumped 4.8% to 584K; the highest since April 2022. How does this land for us from a local perspective? During the first half of 2021 housing starts in Arizona hit a 15 year high. As we entered into the fourth quarter of 2021, 26,700 building permits were pulled in Maricopa County/Central Arizona. Throughout 2022, that number declined to 22,200. 

In our opinion, the issue is not the desirability of Arizona or buyer demand; it’s affordability and uncertainty. For 33 consecutive months, between 2019 and early 2022, the Phoenix market led the nation in home price appreciation. Now we have reached an inflection point on affordability, as a result of this 33-month run, where mortgage rates basically doubled. We all know what “assume” means, however it is a fair assessment that there is downward pressure on the market at large. 

Now that we have shared some facts about the current health of the market, what do we do with this information? 

As real estate agents, we need to remain continuously perceptive in order to provide our clients the best representation possible. New construction is a vital part of our ecosystem, yet in years past builders have had the advantage. Times have changed, and the savvy agent adapts as needed. It’s your obligation to protect and promote the interests of your clients; you can and should negotiate new home purchases on behalf of your consumers. Additionally, the new home sales market is no stranger to buyer concessions, incentives and price corrections. Gain a clear understanding of the inventory and price points as it relates to construction costs and interest rates.

Next burning question; are there benefits to a strong working relationship between new home builders and real estate agents? You bet! You are the expert, get to know your new home builders, and subdivisions, while creating mutually beneficial partnerships within new home communities. Although some feel that these can be confusing relationships, agents and builders alike need to see past any conflict, as the end goal is the same; procure clients, place them in homes and make money. It is your responsibility to be a wealth of knowledge and surround yourself with an inner circle of other thought leaders. Therefore, build trust between yourself and the new home builder; we are confident the result will be a long-lasting, respectful and professional collaboration.