Despite a recent surge in new-home inventory, newly built homes make up just a small percentage of all homes for sale. According to a recent report from real estate marketing platform Redfin, the most recent data (August) indicated that 26.8% of single-family homes for sale nationwide were new homes. That figure is down from 28.2% a year earlier and from 30.6% two years ago.
That said, new homes still make up larger share of the single-family supply than they did prior to the COVID-19 pandemic. As homebuying demand grew over the years following 2020, the share of new-home inventory grew from 15% and 20% between 2018 and 2019 to nearly 35% by 2022. Since then, it has slowly come down.
Rather than a lack of new homes, it’s growing existing-home inventory that’s keeping the share of new homes low
In 2022 and 2023, there were fewer existing-home listings because many homeowners were holding on to their properties due to very low mortgage rates. However, as the lock-in effect fades, more people are putting their homes up for sale. Changing life situations and hopes that buyers will take advantage of slightly lower mortgage rates are also driving more listings.
Additionally, homes are taking more time to sell, causing existing homes to sit on the market longer. Currently, the median time on the market is 50 days, the longest for September since 2016.
To compete with the resale market, builders are offering incentives
Even with a greater number of existing homes on the market, builders are doing their best to draw buyers to the new-home segment by offering incentives including mortgage-rate buydowns or paying for closing costs.
