BAM Key Details: 

  • About one-third of single family homes for sale in the first quarter of 2024 were new construction, roughly the same as last year but nearly double pre-pandemic levels. 
  • This year’s 33.4% is down from the record high of 34.5% reached two years ago. 

New builds made up about one-third (33.4%) of all homes for sale in Q1 2024—pretty close to last year’s share but down from a record high of 34.5% in 2022. 

That’s according to a new Redfin report, which also points out that this year’s share is still nearly double pre-pandemic levels. 

Redfin-one-third-of-homes-for-sale-were-new-builds-in-Q1-2024

Source: Redfin

2 Reasons for increased share of newly-built homes

Since the pandemic homebuying boom, newly constructed homes have made up an outsized share of inventory—largely for these two reasons: 

  1. The increase in homebuilding—which soared at the beginning of the pandemic. Builders ramped up construction in response to increased demand from buyers, thanks to rock-bottom mortgage rates and remote work. Single-family housing starts are still well above pre-2020 levels. 
  2. The decline in existing homes for sale—as homeowners opted to stay put when mortgage rates reached a two-decade high in 2023. They’re still well above pre-pandemic and pandemic rates. And would-be sellers who don’t have a need or strong desire to move are choosing to hold onto their lower rates. 

It doesn’t mean necessarily that new construction has ramped up…What’s happened is that the level of resale inventory has shrunk.

Robert Dietz

Chief Economist of the National Association of Home Builders (NAHB)

Dietz added that builders are still constructing roughly one million single-family homes a year. And the numbers are worth sharing to prepare buyers for the home shopping process, especially when they’re looking at newly built homes. 

To make it easier to share news like this, BAMx members get a weekly bundle of templates—email, video, social media, and blog—based on the freshest and most reliable news insights. 

New homes may offer buyers more flexible pricing

With inventory still lagging behind demand, buyers have been looking to new construction because, as Zillow senior economist Nicole Bachaud recently told CNBC, “there’s more opportunity.”

Compared to existing home sellers, homebuilders are typically more likely to offer concessions to entice buyers—especially since many of them are still trying to offload completed homes. Builder incentives can include price cuts, mortgage rate buy-downs, amenity upgrades, and covering closing costs. 

Just under two-thirds of homebuilders are using some type of buyer incentive to promote sales. Only about a quarter are offering a price reduction. And when they do, those cuts average around 5% to 6%. 

The price gap between new and existing homes has narrowed

According to data from the U.S. Census Bureau and the U.S. Department of Housing and Urban Development for March, the median sale price for a new home sold in the U.S. was $430,770. 

While new homes still sold for a bit more than existing homes, the price gap between the two has narrowed significantly. 

Matthew Walsh, Assistant Director and economist at Moody’s Analytics, told CNBC, “Prices are much closer to parity than during any point in the last three decades.” 

He added that, over the past six months, the median price for a new home has been only about 4% above that of the median list price for an existing home. That gap is much narrower than it was before the pandemic when the median price of a newly built home was over 40% higher than that of a home listed by its owner. 

As Dietz explained, the drop in the supply of existing homes has caused those prices to skyrocket while prices for new construction are based more on interest rates, housing demand, the level of competition for existing homes, and the cost of construction. 

The share of newly built for-sale homes has dropped slightly from its 2022 peak because an increase in homeowners listing their existing homes has caused total inventory to climb up from last year’s historic low. 

Meanwhile, homebuilders have eased up a little on housing starts, thanks to high mortgage rates and cooling buyer demand. Many are still trying to sell off the glut of homes developed in 2021 and 2022. As of March, we had 8.3 months of newly built homes on the market nationwide, compared to 3.2 months of supply for existing homes. 

Want some help sharing this data with your buyers? Join our growing BAMx community to get your weekly bundle of customizable templates for email, social media, video, and blogs. 

As a member, you’ll also save 25% on BAM Mania—this year’s in-person BAM event in Las Vegas at the Circa Resort and Casino.