New Builds Make Up One-Third of Houses on the Market, With High Rates Locking Up Existing Inventory
- None.
- None.
Redfin reports homebuyers are turning to newly built single-family homes as overall inventory sits at an all-time low
The portion of new homes of all inventory is up from
The second quarter’s share is down from a near-record-high of
New homes make up a near-record share of housing inventory for a few reasons:
- The pandemic-fueled homebuilding boom. Builders rushed to capitalize on the pandemic homebuying frenzy in 2021 and early 2022, driven by record-low mortgage rates and remote work.
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Lack of existing homes on the market. Builders aren’t constructing as many new single-family homes as they were at the height of the pandemic–but so few homeowners are putting their homes on the market that new homes still make up a huge share of available inventory. Total inventory dropped
15% year over year to an all-time low in June. -
Leftover inventory. Because elevated mortgage rates have slowed homebuying demand, builders haven’t yet offloaded all the new homes they completed over the last few years. Although buyers have made a dent in the glut of new-construction homes on the market over the last several months, there are still plenty of new homes on the market. The number of newly built single-family homes for sale was up
4.5% year over year in June, compared with an18% drop for existing homes.
Homebuilders are benefiting from the scarcity of existing homes on the market
With inventory at a record low, many buyers are turning to new construction. But because overall demand is still relatively low, with high rates continuing to sideline many would-be homebuyers, some builders are lowering prices and offering perks to offload excess inventory.
For many homebuyers, new construction is a welcome option in today’s market–especially in the southern part of the country, where new homes tend to be more prevalent. That’s partly because new homes are often easier to find and partly because builders are more likely than individual homeowners to offer concessions; builders typically don’t have the option of pulling a home off the market if they’re unable to get the price they want.
“Builders are still building but homeowners aren’t selling, so new construction is the only option for many buyers,” said Shauna Pendleton, a Redfin Premier agent in
Metro-level highlights: Q2 2023
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Metros where new construction is most prevalent: Newly built homes made up more than half (
52% ) of single-family homes for sale inEl Paso, TX , the biggest share of the metros in this analysis. It’s followed byOmaha, NE (46% ),Raleigh, NC (42.1% ),Oklahoma City (39% ) andBoise (38% ). New construction is typically prevalent in parts of the country with sprawling land and loose building codes. -
Metros where new construction is least prevalent: Newly built homes made up just
2.8% of single-family homes for sale inHonolulu , the smallest share of the metros in this analysis. Next comeSan Diego (3.3% ),Pittsburgh, PA (3.3% ),Oxnard, CA (3.7% ), andDetroit (3.8% ). New construction tends to be relatively uncommon inCalifornia because of limited land and strict regulations. -
Metros with the biggest upticks in newly built homes: New homes made up
33% of single-family inventory inTulsa, OK , up from20% a year earlier. That’s the biggest jump of the metros in this analysis. It’s followed byRichmond, VA (35% , up from23% ),Albany, NY (24% , up from13% ),Phoenix (26% , up from15% ) andElgin, IL (25% , up from15% ). -
Metros with the biggest declines in newly built homes:
Boise saw the biggest year-over-year decline by far, with new homes making up38.3% of inventory, down from49% a year earlier. It’s followed byAustin, TX (30.4% , down from34.5% ),Honolulu (2.8% , down from6.4% ),Allentown, PA (14.9% , down from18.5% ) andHouston (35.3% , down from38.5% ).
To view the full report, including charts and additional metro-level data, please visit: https://www.redfin.com/news/new-construction-homes-one-third-of-inventory
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Source: Redfin
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