The share of houses for sale that are brand new is hovering at nearly double the pre-pandemic rate. In the first quarter, 33.4% of single-family homes for sale in the U.S. were newly built.
This figure is essentially unchanged from a year earlier but down slightly from a record-high 34.5% two years ago. Despite the slight drop, the portion of new homes remains about double pre-pandemic levels.
The pandemic homebuying boom spurred a surge in homebuilding, causing new homes to dominate the market. Two main factors contribute to this trend:
- Increased Homebuilding: At the pandemic’s start, home construction surged as builders responded to high homebuying demand fueled by remote work and low mortgage rates. Single-family housing starts remain significantly higher than pre-2020 levels.
- Decreased Existing Home Supply: Homeowners are staying put due to high mortgage rates, which hit a two-decade high last year and remain elevated. Many prefer to keep their low rates rather than move and take on higher ones.
Nicole Dege, a Redfin Premier agent in Orlando, FL, commented, “We have a fair amount of new-construction homes for sale, and thank goodness we do. Buyers are struggling to find single-family homes within their budget because few homeowners are selling.
Those who do list often price high, not realizing prices have dropped since their 2022 peak. Builders understand the current market better, so they’re pricing fairly, offering mortgage-rate buydowns, and other concessions to attract buyers.”
The share of new homes in for-sale supply has dipped slightly from its 2022 peak as overall inventory has increased from last year’s historic lows with more homeowners listing their homes. Builders have also slightly reduced housing starts due to high mortgage rates and reduced demand.
Many builders are still trying to sell homes started in 2021 and 2022. As of March, there were 8.3 months of new-construction home supply on the market nationwide, compared to 3.2 months for existing homes.
I’m Tanner Murphy, a retired real estate agent from California, now writing for propertyescape.net. I simplify California’s complex real estate laws for readers, making it easier to understand and navigate the market.
