Of all homes buyers could consider in the second quarter, 31.4% were new construction – the highest 2Q percentage on record. Pre-pandemic it was 17%.
SEATTLE – Newly built homes made up nearly one-third (31.4%) of all single-family home listings on the market nationwide in the second quarter, according to a report from Redfin, the highest share of any second quarter on record though down from the first quarter of 2023.
The portion of new homes of all inventory is up from 30.3% a year earlier – a 1.1 percentage point increase – and nearly double the pre-pandemic share of about 17% in the second quarter of 2019.
The second quarter’s share is down from a near-record-high of 33.6% the previous quarter, however, but Redfin calls that “a normal seasonal pattern, as the share of new homes tends to peak in the winter months.”
In Florida’s Lakeland metro area, 2Q 2023 saw a drop in new-construction homes as a percent of all listings, the only state metro area to see a drop. In other Florida metros, the year-to-year increase in new-home listings varied from a 0.2 percentage-point, year-to-year increase up to 2.3 percentage points in West Palm Beach.
Florida metro year-to-year changes in new-home listings 2Q 2022-2023
- Cape Coral: 26.6% to 27.22%, a 0.6 percentage point increase
- Fort Lauderdale: 4.4% to 4.6%, a 0.2 point increase
- Jacksonville: 4.4% to 4.6%, a 0.2 point increase
- Lakeland: 32.2% to 29.06%, a 2.6-point decrease
- Miami: 5.7% to 8.1%, a 2.4-point increase
- North Port: 25.3% to 25.8%, a 0.5-point increase
- Orlando: 19.3% to 19.6%, a 0.3-point increase
- Tampa: 17.4% to 18.4%, a 1.0-point increase
- West Palm Beach: 6.1% to 8.4%, a 2.3-point increase
Why the big increase in new homes?
- The pandemic-fueled homebuilding boom. Builders rushed to capitalize on the pandemic homebuying frenzy in 2021 and early 2022, driven by record-low mortgage rates and remote work.
- Lack of existing homes on the market. Builders aren’t constructing as many new single-family homes as they were at the height of the pandemic – but so few homeowners are putting their homes on the market that new homes still make up a huge share of available inventory. Total for-sale housing inventory dropped 15% year-to-year to an all-time low in June.
- Leftover inventory. Because elevated mortgage rates slowed homebuying demand, builders haven’t offloaded all the new homes they completed over the last few years. Although buyers made a dent in the glut of new-construction homes on the market over the last several months, there are still plenty of new homes available. The number of newly built single-family homes for sale was up 4.5% year-over-year in June, compared with an 18% drop for existing homes.
“Builders are still building but homeowners aren’t selling, so new construction is the only option for many buyers,” says Shauna Pendleton, a Redfin Premier agent in Boise, ID, where new homes made up nearly 40% of single-family inventory in the second quarter. “A lot of buyers want to secure a home now because they’re worried prices are going to go back up, and new construction is more plentiful with perks that are hard to pass up. One builder is doing a promotion where buyers get anywhere from $15,000 to $25,000 worth of concessions. It was supposed to end in June, but they extended it through July, and now they’re extending it through August. That money can cover all of a buyer’s appliances with money left over for a mortgage-rate buydown.”
Metro-level highlights: Q2 2023
- Metros where new construction is most prevalent: Newly built homes made up more than half (52%) of single-family homes for sale in El Paso, Texas, the biggest share of the metros in this analysis. It’s followed by Omaha, Nebraska (46%); Raleigh, North Carolina (42.1%); Oklahoma City (39%); and Boise, Idaho (38%). New construction is typically prevalent in parts of the country with sprawling land and loose building codes.
- Metros where new construction is least prevalent: Newly built homes made up just 2.8% of single-family homes for sale in Honolulu, the smallest share of the metros in this analysis. Next come San Diego (3.3%); Pittsburgh, Pennsylvania (3.3%); Oxnard, California (3.7%); and Detroit (3.8%). New construction tends to be relatively uncommon in California because of limited land and strict regulations.
- Metros with the biggest uptick in newly built homes: New homes made up 33% of single-family inventory in Tulsa, Oklahoma, up from 20% a year earlier. That’s the biggest jump of the metros in this analysis. It’s followed by Richmond, Virginia (35%, up from 23%); Albany, New York (24%, up from 13%),; Phoenix (26%, up from 15%); and Elgin, Illinois (25%, up from 15%).
- Metros with the biggest declines in newly built homes: Boise saw the biggest year-over-year decline by far, with new homes making up 38.3% of inventory, down from 49% a year earlier. It’s followed by Austin, Texas (30.4%, down from 34.5%); Honolulu (2.8%, down from 6.4%); Allentown, Pennsylvania (14.9%, down from 18.5%); and Houston (35.3%, down from 38.5%).
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