One-Third of Houses for Sale Are New Construction, an All-Time High

Rhea-AI Summary

Redfin reports that the share of newly built single-family homes in the U.S. reached a record high of 34.1% in December, up from 25.4% last year. The increase reflects builders' efforts to meet surging demand due to low mortgage rates and inventory shortages. Existing home inventory dropped 14.2% year-over-year, while new home inventory rose 34.8%. Median sale prices for new homes were $377,700, experiencing a 9.2% month-over-month decline but a 3.4% increase year-over-year. Building permits also rose 6.5% year-over-year, signaling continued supply growth.

Positive

• Record high share of newly built homes at 34.1%.
• New home inventory rose 34.8% year-over-year.
• Building permits increased 6.5% year-over-year, indicating future supply growth.

Negative

• Existing home inventory decreased 14.2% year-over-year.
• Median sale price of new homes dropped 9.2% month-over-month.
• Home sales declined 14% year-over-year.

The share of newly built single-family homes on the market is at a record high as builders try to keep up with surging homebuyer demand fueled by low mortgage rates, low inventory and remote work

SEATTLE--(BUSINESS WIRE)-- (NASDAQ: RDFN) — More than one-third (34.1%) of U.S. single-family homes for sale in December were new construction, up from 25.4% a year earlier and the highest share on record, according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage.

Newly built homes have taken up an increasing portion of U.S. housing inventory over the last 10 years, with a major acceleration in mid-2020 after the pandemic began. Homebuilders have been busy trying to make up for the lack of existing homes on the market and keep up with high demand. There has been a surge in homebuyer demand since the start of the pandemic, stemming from low mortgage rates and the prevalence of remote work. At the same time, some homeowners have opted to refinance or remodel instead of selling, intensifying the shortage of existing homes for sale.

Overall inventory dropped to a record low in December. Inventory of existing homes fell 14.2% year over year in December, and there was a record-low 1.8 months of supply. For new homes, there was 6 months of supply and inventory was up 34.8%.

As the share of homes for sale that are newly built has edged up, the share of home sales that are new builds has remained relatively consistent, around 11%. This dichotomy is another indicator that homebuyer demand is far outpacing supply.

“A lot of pre-owned homes are being listed, but they are just selling off so quickly—typically in a matter of days—while new homes take longer to sell,” said Redfin Economist Sheharyar Bokhari. “So as a homebuyer, you’re increasingly likely to see new builds when you look up homes for sale in your target area. Existing homes tend to be less expensive and fly off the shelves faster, so people who are just getting into the market should speak to their lender and agent about preparing to act quickly when an existing home that meets their criteria does hit the market this winter.”

Houston has the biggest share of newly built homes for sale

In Houston, 39.5% of for-sale homes were newly built in the fourth quarter, the largest share of the 50 metros in this analysis. It’s followed by Minneapolis (38.3%) and San Antonio (37.5%). Texas metros top this list because they typically have more land to build new homes on and relatively lenient construction regulations.

On the other end of the spectrum, three California metros had the smallest shares of new-construction inventory. In San Diego, 3.1% of for-sale homes were newly built, followed by Anaheim (3.8%) and Los Angeles (4.4%). California has a lack of vacant land and less space zoned for housing development.

Building permits are up, a signal that supply of new homes will continue to rise

The number of building permits was up 6.5% year over year in December, and up 9.1% from the month before. Building permits are government-granted authorizations that allow builders to begin construction.

The uptick in building permits at the end of last year is a sign that supply and sales of newly built homes will continue to rise in 2022. Builders are betting demand from buyers will continue in the coming year as permanent remote work policies allow more people to move. More new homes in the pipeline should help boost the overall supply of for-sale homes.

U.S. New Construction Housing Market Summary: December 2021
Share of homes for sale that are newly built	34.1%
Median sale price	$377,700
Median sale price, MoM	-9.2%
Median sale price, YoY	3.4%
Number of homes for sale, MoM	1.5%
Number of homes for sale, YoY	34.8%
Number of homes sold, MoM	11.9%
Number of homes sold, YoY	-14%
Building permits, MoM	9.1%
Building permits, YoY	6.5%
Data is from the U.S. Census Bureau Sales, inventory and building permits data is seasonally adjusted

To view the full report, including charts and methodology, please visit: https://www.redfin.com/news/new-construction-record-share-inventory-december-2021/

About Redfin

Redfin (www.redfin.com) is a technology-powered real estate company. We help people find a place to live with brokerage, instant home-buying (iBuying), rentals, lending, title insurance, and renovations services. We sell homes for more money and charge half the fee. We also run the country's #1 real-estate brokerage site. Our home-buying customers see homes first with on-demand tours, and our lending and title services help them close quickly. Customers selling a home can take an instant cash offer from Redfin or have our renovations crew fix up their home to sell for top dollar. Our rentals business empowers millions nationwide to find apartments and houses for rent. Since launching in 2006, we've saved customers more than $1 billion in commissions. We serve more than 100 markets across the U.S. and Canada and employ over 6,000 people.

For more information or to contact a local Redfin real estate agent, visit www.redfin.com. To learn about housing market trends and download data, visit the Redfin Data Center. To be added to Redfin's press release distribution list, email press@redfin.com. To view Redfin's press center, click here.

View source version on businesswire.com: https://www.businesswire.com/news/home/20220131005758/en/

Redfin Journalist Services:

Isabelle Novak, 414-861-5861

press@redfin.com

Source: Redfin

FAQ

What is the record high share of newly built homes in the U.S. as of December 2021?

The share of newly built homes reached a record high of 34.1%.

How much did new home inventory increase year-over-year?

New home inventory rose 34.8% year-over-year.

What was the median sale price of newly built homes in December 2021?

The median sale price of newly built homes was $377,700.

Did building permits increase or decrease in December 2021?

Building permits increased by 6.5% year-over-year in December 2021.

What percentage of home sales in December were new builds?

Approximately 11% of home sales were new builds.