27% of For-Sale Homes Are Newly Built, the Lowest Share in 4 Years

• That’s still well above pre-pandemic levels. 
• The pool of existing inventory is rising as more homeowners list and homes linger on the market. At the same time, some builders are refraining from starting new projects as they try to offload inventory. 
• House hunters who are interested in new construction may want to act now, while the pool of new homes is still fairly deep. 

Newly built homes made up 26.8% of single-family homes for sale nationwide in August, the lowest level in four years. That’s down from 28.2% a year earlier and 30.6% two years earlier.

This is from a Redfin analysis of U.S. Census and NAR data. Please note that August is the most recent month for which this data is available. 

New homes still make up a significantly higher portion of single-family supply than before the pandemic. The share shot up as homebuying demand skyrocketed during the pandemic, from between 15% and 20% in 2018 and 2019 to nearly 35% 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 ultra-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. 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% year over year in August, and housing completions fell 8.4%, 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. 

Builders Are Offering Rate Buydowns, Incentives to Lure Buyers

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. The incentives builders provide may make up for the higher sticker price. 

“Builders are desperate to sell,” said Roze Swartz, a Redfin Premier agent in Houston. “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. Builders are buying rates down to 4% or 5% and throwing in $10,000 in closing costs; plus, buyers can breathe easy knowing their home has a new roof, new HVAC system, new everything.”

House hunters searching for a new home may want to act sooner rather than later, as the pool of newly built homes is big now, but starting to shrink. 

“Builders are hesitant to start new projects because in today’s buyer’s market, it doesn’t make financial sense,” said Jesse Landin, a Redfin Premier agent in San Antonio. “The market is oversaturated with new construction, so much so that some local builders are laying off workers–something I’ve never heard of happening before.”

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