Newly built homes made up 27 percent of single-family homes for sale nationwide in August, the lowest level in four years, according to a new report from Redfin. That’s down from 28 percent a year earlier and 31 percent two years earlier.
New homes still make up a “significantly higher” portion of single-family supply than before the pandemic, according to Redfin. The share shot up as homebuying demand skyrocketed during the pandemic, from between 15 percent and 20 percent in 2018 and 2019 to nearly 35 percent in 2022, and has come down since then.
Newly built homes are making up a smaller share of the inventory pie than they were several years ago mainly because the supply of existing homes has rebounded.
There was a shortage of new listings of existing homes in 2022 and 2023, with many homeowners locked-in by low mortgage rates. Now, more Americans are listing their homes, with the lock-in effect easing, life circumstances motivating people to sell, and homeowners hoping buyers jump on slightly lower mortgage rates, according to Redfin.
At the same time, homes are typically staying on the market for a long time: Homes are selling in a median of 50 days, the longest September span since 2016. Homes that do go under contract are increasingly going back on the market after the buyer backs out.
On the other side of the equation, some homebuilders are starting to pull back. Housing starts fell 6 percent year-over-year in August, and housing completions fell 8 percent, per the U.S. Census. After construction surged during the pandemic to meet homebuying demand, some builders are opting against starting new projects because they’re still trying to offload inventory that’s already completed. Some are struggling to do so because homebuying demand is tepid due to still-elevated mortgage rates, high home prices and economic uncertainty, according to Redfin.
Many builders are offering incentives — such as mortgage-rate buydowns, paying for closing costs and new appliances — to attract buyers. That’s especially prevalent in parts of the country where new homes are popular, like Texas, Utah and Florida.
While new homes are typically a bit more expensive than existing homes, it’s a good time to buy a newly built home for those who can afford it, according to Redfin. The incentives builders provide may make up for the higher sticker price.
“Builders are desperate to sell,” Houston-based Redfin Premier agent Roze Swartz said in a release. “Prices are lower than usual, insurance costs are lower than for existing homes, and buyers have the power because there’s more supply than demand.”