New Construction Homes Take Bigger Piece of the Market Pie, According to Redfin
More than a quarter (25.7%) of single-family homes for sale in America during the first quarter were new-construction homes, according to a new report from real estate brokerage Redfin.
That’s up from 20.4% a year earlier and represents the highest share on record.
New-construction homes have steadily been taking up a larger piece of the pie over the last decade, but there has been a notable acceleration during the coronavirus pandemic. There are two primary reasons, according to Redfin Lead Economist Taylor Marr: an increase in homebuilding and a decrease in the number of Americans putting their houses up for sale.
“Building homes has become more attractive and profitable during the pandemic due to record-low mortgage rates and red-hot homebuyer demand,” Marr said. “At the same time, many homeowners have opted to stay put and refinance or remodel their existing homes instead of selling them, allowing new-construction homes to take up a larger portion of the market.”
U.S. housing starts—the number of new residential construction projects—jumped nearly 20% month over month in March to the highest level since 2006, a sign that homebuilders are growing more bullish despite lumber shortages and elevated construction costs. Meanwhile, listings of existing homes fell.
A lot of pandemic homebuyers have also turned to the new-construction market because bidding wars are fierce and new homes have historically attracted less competition.
But the U.S. housing shortage has grown so severe that some newly built homes now have waitlists that are 90 buyers deep, said Redfin’s Salt Lake City Market Manager, Ryan Aycock. Some builders are even canceling contracts with buyers who refuse to accept price increases.
“New construction has typically been a good option for buyers who don’t want to deal with bidding wars because builders don’t usually set deadlines for offers. Buyers also like that they can often buy a new home for what it’s actually listed for rather than having to offer way over the asking price to win,” said Redfin Houston real estate agent Melanie Miller.
“However, inventory for new construction is very low and prices are now rising for many new and pre-construction homes because lumber prices have gone up. I had one buyer who came to terms with a builder at a certain price. The builder called us the next day and said they can’t do that price anymore because their suppliers just increased prices.”
To read the full report, including charts with metro-level data, visit: https://www.redfin.com/news/new-construction-Q1-2021
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