The number of homes for sale that are newly constructed hit a record high in the third quarter, according to the latest data from Redfin.
- 29% of U.S. single-family homes for sale in the third quarter were new construction, that is up from the 25% reported in Q3 of 2021 and the 18% reported in Q3 2020.
- This was the highest share of any third quarter on record. The highest share of any quarter on record was 34% in the first quarter of 2021.
New Homes In Boomtowns. Not surprisingly, the housing markets that took off during the pandemic boom are now seeing the highest share of new homes. Leading the way in Q3 was El Paso, TX where newly built single-family homes made up half of all homes for sales.
- Oklahoma City took the number two spot with 43% of new home listings being new construction followed by Omaha (40%), Raleigh (39%), and Houston (37%).
Builder Concern. With the growing supply of new homes some builders are pulling a complete 180 and are offering big time incentives to relators and protentional buyers according Faith Floyd, a Redfin real estate agent in Houston.
- “[Builders] are offering to buy down the buyer’s mortgage rate by 1.5 points, and I’ve seen at least one offer a $10,000 check for closing costs, a $3,000 gift card and a free fridge.”
- “[Builders] are offering agents a 5% commission, up from 0% during the pandemic and the typical 3% before the pandemic, in addition to bonuses of $6,000.”
Analysis. Taylor Marr, Deputy Chief Economist at Redfin, said the glut of new construction will likely cause builders to pull back on certain projects. “Homebuilders will take on fewer new projects next year as they focus on getting their existing projects sold…Builders will also shift more toward multifamily units, for which there is still relatively high demand because rents remain high.”