More than one-third (34.1 percent) of single-family homes for sale in December were new construction, up from 25.4 percent a year earlier and the highest share on record, according to Redfin.
Newly built homes have taken up an increasing portion of housing inventory over the last 10 years, especially in mid-2020 after the pandemic began. Homebuilders have been busy trying to make up for the lack of 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, according to Redfin. At the same time, some homeowners have opted to refinance or remodel instead of sell, intensifying the shortage of inventory.
Inventory of existing homes fell 14.2 percent year-over-year in December, and there was a record-low 1.8 months of supply. For new homes, there was six months of supply and inventory was up 34.8 percent.
“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,” Redfin Economist Sheharyar Bokhari said in a release. “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.”
In Houston, 39.5 percent of for-sale homes were newly built in the fourth quarter, the largest share of the 50 metros Redfin analyzed. It’s followed by Minneapolis (38.3 percent) and San Antonio (37.5 percent).
On the other end of the spectrum, three California metros had the smallest shares of new-construction inventory. In San Diego, 3.1 percent of for-sale homes were newly built, followed by Anaheim (3.8 percent) and Los Angeles (4.4 percent).
The number of building permits was up 6.5 percent year-over-year in December, and up 9.1 percent month-over-month. The uptick in building permits is a sign that supply and sales of newly built homes will continue to rise in 2022, Redfin said. Builders are betting demand from buyers will continue in the coming year as permanent remote work policies allow more people to move.