The U.S. housing market is on fire. Existing-home sales climbed in August, marking three consecutive months of positive sales gains, according to the National Association of Realtors®, and home sales as a whole rose year-over-year, up 10.5% from a year ago.

With mortgage rates at rock bottom, houses at all price points are being snapped up within 48 hours of listing, and buyer demand for shrinking inventory s triggering multiple offers, bidding wars, and rising prices.

“In the midst of this vibrant market we have, at best, a 30- to 45-day inventory of homes to sell,” said Lori Arnold, president, Coldwell Banker Apex Realty in Dallas, a third- generation family-owned company that closed over 9,000 transactions last year. “It’s clear that we need alternatives.”

With new construction a clear alternative, and with plenty of land available in the Dallas suburbs, Arnold said, several production builders are meeting the challenge with new homes in the affordable $300,000 to $700,000 price range.

“Homes here are going up in as little as 60 days,” she said, and buyers are happy to pick their own colors and buy brand new.”

New construction is bolstering inventory in other areas where land is plentiful.

“With little standing inventory available, there is plenty of interest here in pre-sale new construction,” said David Boehmig, president and CEO, Atlanta Fine Homes Sotheby’s International Realty. “Atlanta is one of the least dense of the major metropolitan areas, and land is affordable for builders, so even though COVID-related restrictions on building materials are resulting in higher prices, we are seeing a fair amount of new construction at all price points.”

In denser areas like San Francisco, where land is not readily available, little if any new construction is underway, and buyers are moving further and further out of the metro area to accommodate their needs, said career agent Logan Link, half of the Logan and Bernard Group with Compass Realty in upscale Marin County.

“Even out of the city,” she said, “it’s taking builders a long minute to catch up to changing needs and robust demand.”

In fact, single-family home construction nationally is rebounding nationally, according to Danushka Nanayakkara-Skillington, associate vice president, forecasting and analysis, with the National Association of Home Builders (NAHB.) It is up an average of 5.8 percent year over year from July of 2019, although lower in the Northeast than in the other three major regions.

At the same time, however, sales of newly built, single-family homes rose to its highest pace since 2006 in July, up 13.9 percent to a seasonally adjusted annual rate of 901,000 units, according to newly released data by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. The July rate is 36.3 percent higher than the July 2019 pace, and new home sales are up 8 percent on a year-to-date basis.

With new construction widely seen as the best answer to an inventory crisis, why is it lagging behind the need? 

For one thing, few anticipated when the coronavirus pandemic began to shut people in and slash jobs that pent-up demand for more space and more privacy would lead to a buying frenzy.

For another, local government regulations can often slow the time it takes for builders to develop vacant land.

But the biggest issue, Nanayakkara-Skillington  indicated, may be the rising price of lumber.

“The price of lumber increased from $350 per 1,000 square foot in April to $950 in August,” she said. “That can add $16,000 to the cost of a typical home.”

The steep rise in lumber prices in part to shortages resulting from beetle infestations and wildfires, and in part because U.S. and Canadian saw mills slowed production when the pandemic hit. 

“Nobody anticipated this demand,” Nanayakkara-Skillington said. “But lumber mills are slowly opening up again, and the building industry has gained 80 percent of its work force back since April, so we are hopeful production will increase sufficiently to respond to the need for housing.”

One realtor team is capitalizing on three decades of experience and connections to take up the challenge themselves.

“Our vision was to design and build an exclusive, gated community of 12 distinctive homes that are both timeless and sophisticated, said Florida Realtor Rose Sklar, half of the Rose & Dean Sklar Team, Coldwell Banker Realty in Weston. 

Rose, who began her career in real estate in New Jersey 30 years ago, and husband Dean, a former pro-golfer who came into the business with her when they relocated to Florida ten years later, collaborated with developers Centurion Land Group and builders Thomas Harris Construction to bring their vision to life with 12 exclusive homes dubbed Zona West now going up in Davie, Fla.

The luxury homes, beginning at just under $1.5 million, will not be completed for eight to 12 months, but are already drawing interest, Sklar said, from equestrians, beach lovers, and others seeking luxury and privacy in a central area not far from Fort Lauderdale.

“This is something that has been on our radar for some time,” said Sklar. “It’s an opportunity for us and a chance to help  meet a critical need.”

It’s the kind of let’s-get-it-going enthusiasm the industry needs more of now.