One-third (33.4%) of single-family homes for sale in the U.S. in the first quarter were newly built, according to a Redfin report.
Although that is essentially unchanged from a year earlier it is roughly double pre-pandemic levels.
Newly built homes have taken up an increased share of home sales since mortgage interest rates began to increase starting about two years ago: This resulted in many existing-homeowners becoming locked into their low-rate mortgages and, as a result, they became financially disincentivized from selling.
As a result of the strong demand for new homes, builders have been in overdrive. Construction soared at the start of the pandemic, with builders responding to strong demand brought on by remote work and rock-bottom mortgage rates. Today, single-family housing starts are still at significantly higher levels than pre-2020, Redfin says.
“We have a fair amount of new-construction homes for sale, and thank goodness we do,” says Nicole Dege, a Redfin Premier agent in Orlando, Fla., 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 share of for-sale supply that’s newly built has declined slightly from its 2022 peak because total inventory has crept up from last year’s historic lows as more homeowners list their existing homes.
At the same time, builders have eased up slightly on housing starts due to high mortgage rates and dampened demand, Redfin says.
Many of them are still trying to offload the glut of homes they started developing in 2021 and 2022: For new-construction homes, there were 8.3 months of supply on the market nationwide in March, compared to 3.2 months for existing homes.
Photo: Todd Kent