Lack of Existing Homes For Sale Sends Would-Be Buyers Into the New Construction Housing Market

According to the latest Housing Trends Report (HTR), a research product created by the National Association of Home Builders (NAHB) Economics team with the goal of measuring prospective home buyers’ perception of availability and affordability of homes for-sale in their markets, the share of buyers looking to buy new construction increased from 20% in 2022Q4 to 25% in 2023Q2.

In contrast, the NAHB points out that the share of buyers interested in existing homes declined from 39% to 36% in the same period, while the share with no specific preference fell from 41% to 39%.

The move to new construction is the result of higher interest rates that are keeping current homeowners with mortgage rates of 4% in their current residence, the HTR says. In turn, that vacuum has strengthened interest in new home construction.

According to the HTR, buyers’ interest for new homes is widespread. Between 2022Q4 and 2023Q2, all regions experienced an increase in the share of buyers’ interested in new homes. In the West, in particular, the share jumped from 21% in 2022Q4 to 32% in 2023Q2. In the same period, the Northeast saw interest climb from 20% to 24%; the South improved from 20% to 23%; and the Midwest increased from 15% to 18%.