New home sales continue to make up a large fraction of supply, accounting for just over one-third (33.4%) of single-family homes for sale nationwide during the first quarter, according to Redfin.
That’s basically flat year over year and just shy of the peak of 34.5% set two years prior. The first quarter’s new-home sales share remains approximately twice the level seen before the pandemic.
The share of new homes among total sales has remained high since the COVID-era homebuying boom for a number of reasons. For one thing, demand spurred by historically low mortgage interest rates and a surge in remote work had homebuilders racing to infill gaps in inventory. Those gaps in inventory remain problematic today, but for a different reason: the lock-in effect caused by mortgage rates elevated far above those at which many homeowners financed properties during the pandemic.
“We have a fair amount of new-construction homes for sale, and thank goodness we do,” said Orlando Redfin agent Nicole Dege. “Buyers are having a hard time finding single-family homes in their budget because not many homeowners are letting go of their houses, and those who are listing tend to price high because they haven’t come to terms with the fact that prices have come down from their 2022 peak.
“Builders have a better understanding of the current market, so they’re pricing fairly, offering mortgage-rate buydowns and providing other concessions to attract buyers.”
The new-home share of for-sale inventory is down slightly from the all-time high because total inventory is up due to some easing of the lock-in effect. Builders, meanwhile, are backing off of new groundbreakings because high mortgage rates and high home prices have tamped down demand. Many builders, Redfin noted, are still working on selling the backlog of homes they originally began developing in 2021 and 2022.
