More than a quarter (25.7 percent) of single-family homes for sale during the first quarter were new construction, up from 20.4 percent year-over-year, according to a new Redfin
report.
New-construction homes have been on a steady uptick over the last decade, but things have accelerated during the pandemic. There are two reasons, according to Redfin Lead Economist Taylor Marr: an increase in homebuilding and a decrease in the number of houses put 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 in a release. “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.”
The number of new residential construction projects jumped nearly 20 percent month-over-month in March to the highest level since 2006, Redfin reported, while listings of existing homes fell. Many pandemic homebuyers are turning to 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, Redfin’s Salt Lake City Market Manager Ryan Aycock said.
“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,” Redfin Houston real estate agent Melanie Miller said. “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.”
In El Paso, Texas, 53.2 percent of single-family homes for sale in the first quarter were newly built, the largest share of the 82 U.S. metro areas Redfin analyzed. Other metros in the top 10 were Boise, Idaho, (46.7 percent), Houston (35.5 percent), Raleigh, N.C. (34.5 percent), Baton Rouge, La., (34.1 percent), Albany, N.Y. (33.7 percent), Nashville, Tenn., (31.9 percent), Charlotte, N.C. (31.6 percent), Oklahoma City, Okla., (30.8 percent) and Knoxville, Tenn. (29.6 percent).
Fresno, Calif., had the smallest share of single-family homes for sale in the first quarter being newly built (2.4 percent.) It was followed by Oakland, Calif., (2.9 percent), Bakersfield, Calif., (3.2 percent), Riverside, Calif., (3.4 percent), Pittsburgh (3.8 percent), Anaheim, Calif., (4.2 percent), San Diego (4.4 percent), Las Vegas (4.5 percent), Camden, N.J. (4.7 percent) and Newark, N.J. (5 percent).