How Tight Is Inventory? 1 in 4 Listings is New Construction
Except for sky-high material prices, it’s a good time to be in the home construction industry. Of homes available to buyers today, one in four (25.7%) is brand new.
SEATTLE – It’s a good time to work in a new-home niche as it becomes more attractive to home shoppers. The number of existing homes for sale has dropped to historic lows, but builders keep ramping up production.
More than a quarter (25.7%) of single-family homes listed for sale in the first quarter were new-construction homes, according to a national analysis of real estate data from Redfin.
“Building homes has become more attractive and profitable during the pandemic due to record-low mortgage rates and red-hot homebuyer demand,” says Taylor Marr, Redfin’s lead economist. “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.”
Single-family housing starts jumped 41% in March compared to a year earlier, according to the U.S. Census Bureau data. At the same time, the number of existing homes listed for sale fell about 28% in March year-to-year, according to the National Association of Realtors®, though March 2020 was also the month the pandemic started to impact the national economy.
While it takes longer to move into a newly built home, it also provides a benefit to some buyers as bidding wars become commonplace in the existing-home market and they usually encounter less competition in the new-home market.
However, that may be changing. Ryan Aycock, a Redfin market manager in Salt Lake City, says newly built homes in his area have waitlists 90 buyers deep.
New-home prices are rising too. The increase in lumber prices over the past year has added $35,872 to the price of an average new single-family home, according to new housing data from the National Association of Home Builders. The median sales price of a newly built home in March was $330,800.
Source: “Newly Built Homes Make Up 26% of All Single-Family Homes for Sale – A Record High,” Redfin (April 30, 2021)
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