New-home shoppers are giving existing property sellers a run for their money, as the new construction market continues climbing the charts in nationwide buyer demand. New construction projects bumped up by 36% since this time last year, and reached their highest point since 2006.

While all 4 major regions of the country saw an uptick in new construction sales, the Midwest took the cake with a nearly 60% month-over-month increase.

So what’s driving this refound interest in new construction, and will it last?

“Consumers are being driven by low interest rates, a growing focus on the importance of housing, and a shift in buyers seeking homes in lower density areas,” says Chuck Fowke, chairman of the National Association of Home Builders. “Despite these positive conditions, affordability challenges remain, especially as builders are dealing with building cost increases, including a dramatic rise in lumber costs in recent months.”

Data illustrates the median price for a new construction home has bumped up 7% in comparison to a year ago. Considering the growing cost to build anew, experts say this new construction wave may reach its limit sooner than later.

“Builders are already having trouble keeping pace with demand, and materials costs are rising rapidly, which will add to upward pressure on new home prices, meaning affordability will be more sensitive to any given increase in mortgage interest rates. And, with the labor market still in a state of ill repair, it is reasonable to question how long the strength in demand seen over the past few months can be sustained, even absent a meaningful increase in mortgage interest rates,” Richard Moody, chief economist at Regions Financial Corp., wrote in a research note.

Source: National Association of Home Builders