The proportion of newly built homes for sale in the U.S. during the first quarter of 2024 remained steady compared to last year, fueled by a continued shortage of existing-home supply.
According to a Redfin report released Monday, newly built homes accounted for 33.4% of single-family homes for sale in the first quarter, virtually unchanged from a year earlier and down slightly from a peak of 34.5% two years ago. This share is still roughly double pre-pandemic levels.
Newly built homes have taken up an outsized portion of inventory since the pandemic for two main reasons, according to Redfin.
First, a spike in homebuying demand drove the surge in U.S. home construction at the onset of the pandemic. Remote work and historically low mortgage rates made it particularly attractive to buy a home. Second, homeowners have been reluctant to sell their houses due to mortgage rates, which have reached a two-decade high point. Many potential sellers prefer to keep their low rates rather than move and trade in for higher ones.
“We have a fair amount of new-construction homes for sale, and thank goodness we do,” Nicole Dege, a Redfin Premier agent in Orlando, said in the report. “Buyers are having a hard time finding single-family homes in their budget because not many homeowners are letting go of their houses, and those who are listing tend to price high because they haven’t come to terms with the fact that prices have come down from their 2022 peak.
“Builders have a better understanding of the current market, so they’re pricing fairly, offering mortgage-rate buydowns and providing other concessions to attract buyers.”
The slight decline in the share of newly built homes from its 2022 peak can be attributed to an increase in total inventory, as more homeowners are listing their existing homes. Simultaneously, builders have tempered their activity due to high mortgage rates and reduced demand, and many are still working to sell off homes that were started in 2021 and 2022.
In April, single-family housing starts and permits declined, according to a report released by the U.S. Census Bureau and the U.S. Department of Housing and Urban Development (HUD).
The steady presence of newly built homes continues to play a crucial role in meeting demand and providing options for buyers navigating a challenging market.
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