BAM Key Details:

  • A new Redfin report shows nearly a third of all U.S. homes for sale (30.6%) are newly built, marking the highest share of any third quarter on record. 
  • While high mortgage rates and elevated home prices have sidelined many buyers, many of those still shopping are looking at new construction because builders are offering concessions—like mortgage rate buydowns—to offload inventory. 

Nearly a third of all homes for sale in the U.S. (30.6%) are new construction, according to a new report from Redfin, up from 28.9% one year ago and 25% two years prior. That 30.6% is also the highest share of any third quarter on record. 

New builds account for a growing percentage of the housing supply, partly because of the increase in homebuilding and partly because high mortgage rates are deterring sellers. 

And with builders offering concessions like mortgage rate buydowns to sweeten the pot, more buyers are looking at new homes as the preferred option. 

It doesn’t hurt, either, that new homes are less likely to be haunted

Redfin-31-pct-of-homes-for-sale-are-new-builds-chart

Source: Redfin

As mortgage rates surge to 23-year highs, fewer sellers are listing their homes. Meanwhile, homebuilding has increased and taken a larger share of available inventory. Builders keen to offload supply are more likely to offer concessions than sellers hoping to maximize their profits. 

Purchases of newly built single-family homes increased 12.3% last month, marking the fastest pace of increase since early 2022. 

That said, it’s worth pointing out that the latest spike in mortgage rates could slow new construction. And the outcome of this week’s FOMC meeting could send mortgage rates even higher. Or it could lead to some relief for buyers, if only to a small degree. 

Sellers are facing tough competition from homebuilders, who are sometimes offering buyers up to $30,000 worth of concessions. With that kind of money, a buyer can cover closing costs, home upgrades, and buy down their mortgage rate. In some cases, people who purchased a house from a builder a year ago are selling and competing against that same builder for buyers.

Kim Lotz

a Redfin Premier real estate agent in Phoenix

Takeaways for real estate agents

Your typical buyer is most likely not seeing all the homes for sale in their chosen area, whether pre-owned or newly built—even if they’ve spent hours looking at homes listed on Zillow,  Realtor.com, Redfin, etc. 

They may not even know about the concessions being offered by builders in their market, let alone what your trusted lending partners can do to make homeownership more affordable for them. That’s where you come in. 

Sellers also need to know what they’re up against in terms of competition, so they can price their homes competitively, make their homes stand out, and attract more buyers. 

What are you doing this week to give your clients closer to the best possible outcome for them?