32% of Single-Family Homes for Sale in 2023Q4 Were New Construction

On Thursday, Redfin reported that according to its research 31.8% of all US single-family homes for sale in Q4 were new construction. That is that comparable with 31.9% in 2022Q4, the highest level of any Q4 on record.

Redfin argues there are two primary reasons for the growing number of for-sale homes being newly built:

1. Homebuilding has increased. Building has been on an upward trajectory since 2009 as builders have slowly climbed their way out of the hole caused by the Great Recession. Construction also jumped during the pandemic as builders responded to surging homebuyer demand fueled by record-low mortgage rates.
2. The number of homeowners putting their houses on the market has decreased over the last year and a half. That’s because mortgage rates started rising in 2022 and jumped to a 23-year high in 2023, prompting many homeowners to stay put instead of selling and losing the rock-bottom rate they scored during the pandemic. While mortgage rates have fallen a bit in the last few months, this “lock-in effect” continues to hamper listings, which are higher than they were a year ago but remain far below pre-pandemic levels.

A possible third reason, Redfin believes, is that homebuilders have been offering sizable concessions, including money for mortgage rate buydowns, to attract bidders and offload inventory. That has made it hard for some individual sellers of existing homes to compete for buyers.