Newly built homes accounted for 28% of single-family homes for sale during the third quarter, according to new data from Redfin (NASDAQ: RDFN). This is down from 30.5% one year earlier and the lowest share in three years.
The record high for newly built single-family homes for sale was 34.4% set the start of 2022. Redfin noted that despite the new low in the third quarter, the total supply of existing single-family inventory is up 22% year-over-year.
“Newly built homes have made up an outsized portion of homes for sale in the last four years because the supply of new-construction homes soared in 2022 and 2023, while the supply of existing homes dwindled,” said Redfin’s data report. “Inventory of existing homes fell over that period as mortgage rates rose and the lock-in effect took hold. The surge in newly built homes, meanwhile, was caused by builders responding to robust homebuying demand brought on by ultra-low mortgage rates and remote work. While building has since slowed, builders are still completing projects they started in the past few years.”
Redfin added the share of newly built homes may continue to decline but will remain above pre-pandemic levels due to elevated mortgage rates that will keep the supply of existing homes from expanding.
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Enjoy reading your articles- enjoy reading (or scratch my head at) many of the posted comments.
Home ownership I believe is one of most important things people can do to allow for a stability in their lives. That being said, not everyone can or should be a home owner. Homeownership rates in the US have stayed in the mid 60% range for many years. Upper 60’s to just over 70% in early / mid 2000’s. Caused by the easy money available that allowed any one that could fog a mirror to qualify for multiple mortgages. The easing of loan standards and the introduction of mortgage back securities by our government elected officials lead to the housing bubble and collapse in 2007 when the financial markets suppling the dollars figured out that not everyone could or would pay these mortgage obligations. No one wanted to buy the box of chocolate anymore when they found out that some of the pieces were NOT chocolate at all. After the collapse, home builders were forced to let go of their employees and contractors. Their sales didn’t just go down by 10%, they went down TO 10%!
From 2008 until just before COVID hit in 2020, (over a decade) home builders were only able to build approximately half the homes that a 20 year average prior to 2008 said we should have built. The main constraint in this time period was the loss of labor.(many people in the construction industry that lost their jobs in the collapse of 2008 and the “lost decade in the housing industry” NEVER came back). The housing industry was just getting back to approximately 1million single family starts per year when COVID hit. The combination of these events has lead to the supply shortage in housing available today.
With the arrival of COVID and the government mandated shut downs, (labor / supply chains / product shortages) the supply of new housing units was again severely impacted.
Our wise elected officials again got involved with ridiculously low mortgage rates for way too long and billions in free money and stimulus dollars for unneeded projects. Like pouring fuel on an already hot fire – extreme inflation was not a surprise to anyone in the construction industry.
On the demand side, the millennials have now decided to move out of their parent’s home at 30 plus years old.
Our housing shortage doesn’t have one cause and there is not one quick fix. Giving $10k or $25k to home buyers (no matter what race or income level) will NOT help. It will only increase the demand (and price that sellers will be able charge).
We need to increase the supply of housing units. Our elected officials need to step back and not mess this up again. The things they can and should do are to reduce the regulations that prevent the timely and cost effectiveness of new developments and homes.
Government intervention causes unintended winners and losers every time! They need to stay out and not promise people free money to solve a problem they created!
Home builders are working as hard as they can to supply new homes. Finally getting back to just over 1million new single family starts a year. VP Harris is promising to build 3 million new homes over her four year term – if elected. Home builders WILL build over 4 million new homes over this period if we do nothing different. I assume she means 3 million ADDITIONAL homes. Broken down, that equals an additional 750,000 new homes per year. Not sure where the labor and supply of materials will come from to accomplish this with out placing our grand children deeper in already extreme government debt.