Home prices are rising quickly, bidding wars are common, and housing shortages abound: It’s not easy to be a home buyer this spring. “I have been in the business for more than 30 years, and I’ve never seen a market this hot,” Glenn Brunker, president of Ally Home, told CNBC.

Real estate pros are working hard to prevent buyers from feeling remorse after frantically jumping into the market. Figuring out the buyers’ finances is key, real estate pros say. “Come up with a number first,” Jacqueline Cooper, founder and president of Financial Education Associates in Dorchester, Mass., told CNBC. “What you can afford is going to guide not just your principal and interest payments but also taxes and insurance payments.”

Home buyers are heading into transactions quickly, but they need to take into account the full costs of homeownership to truly know what they can afford, such as costs for homeowners associations, sewer and trash maintenance, and utility fees. A mortgage preapproval also is necessary before house hunters start their search, real estate pros say. With a preapproval, a lender reviews the borrower’s finances and provides a specific loan amount for which the borrower qualifies. Also, giving sellers more time to find a new home may be another way to make an offer more attractive. Some first-time buyers are finding that this extra time allotment is a better way to compete against other offers.

Waiving contingencies has grown more common in bidding wars, but it can be a gamble and lead to buyer’s remorse later on. You should talk thoroughly with your clients about waiving inspection or appraisal contingencies so they understand the risks. Also, have more talks about competing in a bidding war so your clients make a smart financial decision. Some buyers may get so involved in a biding war and the idea of winning that they take on more than they can comfortably afford. “It doesn’t matter what the highest bid is and whether you can beat that if you don’t have the money,” Cooper told CNBC.

Buyers are increasingly turning to newly constructed homes for more options. Sales of new single-family homes surged 20.7% month over month in March to a 1.02 million seasonally adjusted annual rate, according to new data from the Department of Housing and Urban Development and the Census Bureau. New-home sales are at the highest annual pace since September 2006.

“Our members are seeing strong buyer traffic as continued low mortgage rates are helping fuel sales,” says Chuck Fowke, chairman of the National Association of Home Builders. “However, builders are still grappling with major supply chain issues and soaring materials costs, which are causing construction delays and preventing them from adding to the already very low inventory.”

Builders are facing particular challenges because of rapidly rising lumber prices, which nearly doubled over a four-month period in 2020 and have continued to reach new highs. To help offset increasingly expensive prices, more builders are adding escalation clauses to their sales contracts.

Many builders are increasing their home prices due to the rising costs of materials. As such, “housing affordability remains a major concern,” says Danushka Nanayakkara-Skillington, the NAHB’s assistant vice president of forecasting. “With building material pricing, the challenge for builders in 2021 will be to deal with higher input costs while making sure home prices remain within reach for American home buyers.”

The median new-home sales price was $330,800 in March. Inventories dropped to a 3.6-month supply last month, and sales contracts for homes that haven’t been built yet surged 150% year over year—an indicator of housing delays and higher construction costs, the NAHB notes. On a regional basis, new-home sales saw the biggest upticks last month in the Midwest, up 53.9% annually, followed by a 50.5% increase in the South and a 36.6% increase in the Northeast. Meanwhile, new-home sales declined 3.3% in the West.

Million-dollar listings are a hot commodity. The number of homes sold for more than $1 million jumped by 81% in February compared to a year earlier. Meanwhile, the number of homes sold for under $100,000 dropped 26% compared to a year ago, according to data from the National Association of REALTORS®.

Wealthy Americans are taking advantage of low mortgage rates, increased savings, and the growth in remote work in order to hunt for larger homes.

The Midwest saw the volume of homes sold for above $1 million double from February of this year compare to last year. The Northeast saw a 98% increase and the South posted a 94% increase.

Economists note that a shortage of homes for sale in the $250,000 and lower category as well as job losses in lower wage earning categories of the economy may be the culprit behind the drop in sales in the lower price brackets.

“There are people who have become much wealthier as their stock portfolios rise and they aren’t spending money on other things besides housing,” says Daryl Fairweather, Redfin’s chief economist. “They are not going out to restaurants or on vacations, and they want to spend their money on housing, spending more time at home.”

Luxury homes are selling faster than they have in the past too. The typical luxury home for sale during the first three months of this year spent 61 days on the market, which is 38 days fewer than a year ago, USA Today reports.

New and advanced product features, along with product quality, price, availability, and green or sustainable features are top priorities for contractors and builders in choosing which products to use in new homes or remodels. Builder Magazine released its annual Brand Use Study, which lists the top products used by builders, developers, and contractors.

More than 750 respondents nationwide shared their brand use practices within 52 building product categories, including cabinets, bath fixtures, flooring, exterior materials, and others. The products are used among single-family builders, builder-developers, general contractors, and multifamily builders.

The survey is broken down into each product category by listing products with the most brand familiarity, those products most often used, and perceptions over which brand offers the highest-quality products.

View the breakdown to see the most popular products in each category. (Note: The link will take you to a form to fill out before accessing the study.)

The majority of home sale contracts are settling on time, but 26% faced delays in February while 6% were terminated completely, according to the latest REALTORS® Confidence Index. The following chart shows the most common issues sparking a delay to closing.

© National Association of REALTORS®

The most common problems leading to a termination of the contract were related to appraisal issues (11%), obtaining financing (10%), and home inspection/environmental issues (9%).

Nevertheless, the housing market remains competitive. Respondents to the REALTORS® Confidence Index report an average of four offers for every house sold. Also, homes typically sold within 20 days—a record low since May 2011, when NAR started collecting such information. A year ago, homes typically sold within 36 days.

Builders ramped up construction of new homes last month, starting 1.74 million units in March—the highest rate in 14 years and a welcome sign that efforts are underway to meet strong buyer demand, Lawrence Yun, chief economist at the National Association of REALTORS®, writes on the association’s Economists’ Outlook blog. “As trade-up buyers purchase newly constructed homes, their prior homes will show up in MLSs and [provide] more choices for consumers,” Yun notes. It could take four to eight months for newly started homes to be completed, Yun adds, “so be patient with the improvement to inventory.”

The increase in housing production comes at a time when builders are facing rising material costs and soaring lumber prices, analysts note. Housing starts in March jumped 19.4% year over year, the Department of Housing and Urban Development and the Census Bureau report. Broken out, single-family starts rose 15.3% to a seasonally adjusted annual rate of 1.24 million and were up nearly 20% in the first quarter of this year compared to the same time period in 2020. The multifamily sector, which includes apartment buildings and condos, rose nearly 31% to a pace of 501,000 units.

“Demand remains solid due to low mortgage rates and a thin level of inventory in the resale market, which is spurring the need for additional supply,” says Robert Dietz, chief economist at the National Association of Home Builders. “The test for the industry this year will be balancing growth and higher construction costs, given ongoing housing affordability challenges.”

Combined single-family and multifamily starts in March rose by the highest amounts in the Midwest, up 122.8% month over month—a jump economists attributed to favorable changes in seasonal weather patterns. The Northeast saw a 64% month-over-month jump, and the South recorded a 13.5% increase. The West was the only region to post a month-over-month decline, falling 13.6%.

Overall housing permits, a gauge of future production, rose 2.7% to a 1.77 million annual rate in March. Single-family permits increased 4.6% to a 1.2 million-unit rate while multifamily permits decreased 1.2% to a 567,000 pace. “Builder confidence remains strong, pointing to gains for single-family construction in 2021,” says Chuck Fowke, the NAHB’s chairman. “However, rising costs for most kinds of building materials continue to impede positive additional momentum in the market.”