Almost a Third of Homes for Sale Are New Construction—the Highest Share of Any Third Quarter on Record

Rhea-AI Summary

In the third quarter, 30.6% of U.S. single-family homes for sale were new construction, the highest share on record. This is due to increased homebuilding and decreased number of existing homeowners selling. Builders are offering concessions like mortgage rate buydowns to attract buyers. Purchases of new single-family homes increased by 12.3% last month.

New builds are taking up a growing share of the pie as builders attract buyers with concessions, and surging mortgage rates prevent existing homeowners from selling

SEATTLE--(BUSINESS WIRE)-- (NASDAQ: RDFN) — Nationwide, 30.6% of U.S. single-family homes for sale in the third quarter were new construction, according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage. That’s the highest share of any third quarter on record and up from 28.9% one year earlier and 25% two years earlier.

Newly built homes have taken up a growing share of for-sale housing inventory partly because homebuilding has increased and partly because the number of existing homeowners putting their houses up for sale has decreased as mortgage rates have surged to a 23-year high of roughly 8%.

High mortgage rates have pushed a lot of buyers to the sidelines, but many of the buyers who are in the market are opting for new construction homes because builders are handing out concessions like mortgage rate buydowns in order to attract bidders and offload inventory. Purchases of new single-family homes jumped 12.3% last month—the fastest pace since early 2022. It’s worth noting that the latest run up in mortgage rates could slow new-home construction.

“Sellers are facing tough competition from homebuilders, who are sometimes offering buyers up to $30,000 worth of concessions,” said Kim Lotz, a Redfin Premier real estate agent in Phoenix. “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."

To view the full report with additional charts, please visit: https://www.redfin.com/news/new-construction-homes-Q3-2023

About Redfin

Redfin (www.redfin.com) is a technology-powered real estate company. We help people find a place to live with brokerage, rentals, lending, title insurance, and renovations services. We sell homes for more money and charge half the fee. We also run the country's #1 real estate brokerage site. Our home-buying customers see homes first with on-demand tours, and our lending and title services help them close quickly. Customers selling a home in certain markets can have our renovations crew fix up their home to sell for top dollar. Our rentals business empowers millions nationwide to find apartments and houses for rent. Customers who buy and sell with Redfin pay a 1% listing fee, subject to minimums, less than half of what brokerages commonly charge. Since launching in 2006, we've saved customers more than $1.5 billion in commissions. We serve more than 100 markets across the U.S. and Canada and employ over 5,000 people.

For more information or to contact a local Redfin real estate agent, visit www.redfin.com. To learn about housing market trends and download data, visit the Redfin Data Center. To be added to Redfin's press release distribution list, email press@redfin.com. To view Redfin's press center, click here.

View source version on businesswire.com: https://www.businesswire.com/news/home/20231031702023/en/

Redfin Journalist Services:

Angela Cherry

913-638-8249

press@redfin.com

Source: Redfin

FAQ

What is the share of new construction homes in the third quarter?

30.6% of U.S. single-family homes for sale in the third quarter were new construction, the highest share on record.

Why are newly built homes taking up a growing share of for-sale housing inventory?

Newly built homes are taking up a growing share of for-sale housing inventory due to increased homebuilding and decreased number of existing homeowners putting their houses up for sale.

Why are buyers opting for new construction homes?

Buyers are opting for new construction homes because builders are offering concessions like mortgage rate buydowns to attract bidders and offload inventory.

What was the increase in purchases of new single-family homes last month?

Purchases of new single-family homes increased by 12.3% last month, the fastest pace since early 2022.

How are builders competing with sellers?

Builders are offering buyers up to $30,000 worth of concessions, which can cover closing costs, home upgrades, and buy down their mortgage rate. Sellers who purchased a house from a builder a year ago are now competing against the same builder for buyers.