Redfin reports homebuyers are turning to newly built single-family homes as overall inventory sits at an all-time low

Newly built homes made up nearly one-third (31.4%) of single-family homes on the market nationwide in the second quarter, according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage. That’s the highest share of any second quarter on record, with new construction keeping the housing market afloat amid the severe shortage of existing homes for sale.

The portion of new homes of all inventory is up from 30.3% a year earlier and nearly double the pre-pandemic share of about 17% in the second quarter of 2019.

The second quarter’s share is down from a near-record-high of 33.6% the previous quarter, but that’s a normal seasonal pattern, as the share of new homes tends to peak in the winter months.

New homes make up a near-record share of housing inventory for a few reasons:

• The pandemic-fueled homebuilding boom. Builders rushed to capitalize on the pandemic homebuying frenzy in 2021 and early 2022, driven by record-low mortgage rates and remote work.
• Lack of existing homes on the market. Builders aren’t constructing as many new single-family homes as they were at the height of the pandemic–but so few homeowners are putting their homes on the market that new homes still make up a huge share of available inventory. Total inventory dropped 15% year over year to an all-time low in June.
• Leftover inventory. Because elevated mortgage rates have slowed homebuying demand, builders haven’t yet offloaded all the new homes they completed over the last few years. Although buyers have made a dent in the glut of new-construction homes on the market over the last several months, there are still plenty of new homes on the market. The number of newly built single-family homes for sale was up 4.5% year over year in June, compared with an 18% drop for existing homes.

Homebuilders are benefiting from the scarcity of existing homes on the market

With inventory at a record low, many buyers are turning to new construction. But because overall demand is still relatively low, with high rates continuing to sideline many would-be homebuyers, some builders are lowering prices and offering perks to offload excess inventory.

For many homebuyers, new construction is a welcome option in today’s market–especially in the southern part of the country, where new homes tend to be more prevalent. That’s partly because new homes are often easier to find and partly because builders are more likely than individual homeowners to offer concessions; builders typically don’t have the option of pulling a home off the market if they’re unable to get the price they want.

“Builders are still building but homeowners aren’t selling, so new construction is the only option for many buyers,” said Shauna Pendleton, a Redfin Premier agent in Boise, ID, where new homes made up nearly 40% of single-family inventory in the second quarter. “A lot of buyers want to secure a home now because they’re worried prices are going to go back up, and new construction is more plentiful with perks that are hard to pass up. One builder is doing a promotion where buyers get anywhere from $15,000 to $25,000 worth of concessions. It was supposed to end in June, but they extended it through July, and now they’re extending it through August. That money can cover all of a buyer’s appliances with money left over for a mortgage-rate buydown.”

Metro-level highlights: Q2 2023

• Metros where new construction is most prevalent: Newly built homes made up more than half (52%) of single-family homes for sale in El Paso, TX, the biggest share of the metros in this analysis. It’s followed by Omaha, NE (46%), Raleigh, NC (42.1%), Oklahoma City (39%) and Boise (38%). New construction is typically prevalent in parts of the country with sprawling land and loose building codes.
• Metros where new construction is least prevalent: Newly built homes made up just 2.8% of single-family homes for sale in Honolulu, the smallest share of the metros in this analysis. Next come San Diego (3.3%), Pittsburgh, PA (3.3%), Oxnard, CA (3.7%), and Detroit (3.8%). New construction tends to be relatively uncommon in California because of limited land and strict regulations.
• Metros with the biggest upticks in newly built homes: New homes made up 33% of single-family inventory in Tulsa, OK, up from 20% a year earlier. That’s the biggest jump of the metros in this analysis. It’s followed by Richmond, VA (35%, up from 23%), Albany, NY (24%, up from 13%), Phoenix (26%, up from 15%) and Elgin, IL (25%, up from 15%).
• Metros with the biggest declines in newly built homes: Boise saw the biggest year-over-year decline by far, with new homes making up 38.3% of inventory, down from 49% a year earlier. It’s followed by Austin, TX (30.4%, down from 34.5%), Honolulu (2.8%, down from 6.4%), Allentown, PA (14.9%, down from 18.5%) and Houston (35.3%, down from 38.5%).

To view the full report, including charts and additional metro-level data, please visit: https://www.redfin.com/news/new-construction-homes-one-third-of-inventory

Owning a home has long been considered the quintessential American dream, but the path to those white picket fences is far from smooth. Although 84% of Americans say they’d like to own a home one day, 51% who don’t own today worry they’ll never get there.

We asked 2,000 U.S. consumers about their homeownership dreams, fears and challenges — here’s what we found.

•  An overwhelming 94% of consumers say owning a home is part of the American dream — even if only 84% say it’s part of their dream.
• 51% of respondents who don’t own a home say they’re worried they never will. Among those who want to own one day, 49% say they can’t afford a down payment and 40% say home prices are too high in their area. Student loan debt weighs heaviest on millennials, with 19% citing it as a roadblock to homeownership.
• Of the 84% who’d rather own a home than rent, nearly 3 in 5 (59%) say they like the flexibility to do whatever they want with the space — 58% say they value not having to worry about renewing a lease.
• Among the 16% who say they prefer to rent, 42% like not being responsible for maintenance or repair costs — 37% say it’s simply more affordable to rent.
• Home maintenance and repair costs are the top reasons homeowners dislike owning, at 36%; property taxes (35%) are a close second. Among renters, 30% say the worst part about their current situation is the unexpected rent increases, followed by having to deal with a landlord (22%).

You can check out our full report here: https://www.lendingtree.com/home/mortgage/homeownership-dreams-survey/

LendingTree's Senior Economist, Jacob Channel, had this to say:

"There’s no getting around how tough buying a home can be in today’s high-interest rates and high-price housing market. As tough as it may seem, those who want to buy but can’t afford to right now should try to keep hope. The more time you give yourself to do things like save for a down payment and work on your credit score, the more likely you’ll be able to buy one day.” 

Redfin reports Texas and Florida survey respondents are twice as likely to cite affordability as a factor in choosing where to live than alignment on social issues

Roughly two of every five respondents to a recent Redfin survey who live in Texas or Florida would prefer to live in a place where abortion is legal, according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage. That’s double the share who would prefer not to live in a place where abortion is legal.

The results from Texas and Florida are similar to results from the country as a whole. Texas has an abortion ban, and Florida's abortion ban is in legal limbo. Like Florida and Texas residents, about two of every five respondents from the U.S. overall would prefer to live in a place where abortion is legal, roughly double the share who would prefer not to.

This is according to a Redfin-commissioned survey conducted by Qualtrics in May and June 2023. The survey was fielded to 5,079 U.S. residents who either moved in the last year, plan to move in the next year, or rent their home. This report focuses on the 396 respondents who indicated they live in Florida, and the 414 who indicated they live in Texas.

Florida and Texas respondents are more likely to cite affordability than social views as a factor in choosing where to live

The contradiction between the type of place Florida and Texas respondents say they would prefer to live and where they actually live suggests that for many people, other factors outweigh social preferences in choosing where to reside.

Just over 1 in 10 Florida (13%) and Texas (12%) respondents who recently relocated said living in an area better aligned with their views on social issues factored into their move. Affordability was a more common reason, with more than 20% of Florida and Texas respondents citing a lower cost of living. Other reasons more commonly cited than alignment on social issues include a desire for more space and being closer to family. The results are similar for the U.S. as a whole.

“Deciding where to live is a compromise, and the housing affordability crisis in many parts of the country means many homebuyers must compromise certain preferences for affordability,” said Redfin Chief Economist Daryl Fairweather. “Even though many parts of Florida and Texas have attracted an influx of migrants who have pushed up prices over the last few years, homes there are far less expensive than a coastal city. A person who identifies with the local policies of a place like Seattle or San Francisco may live in a place like Dallas simply because it’s what they can afford.”

“Still, people often self-sort into areas where their neighbors have similar social and political views,” Fairweather continued. “Liberal people who live in Texas or Florida may choose a home in a neighborhood where they see flags that speak to their beliefs, for example.”

Homebuyers who are moving from one part of the country to another tend to flock from expensive coastal cities to relatively affordable metro areas, a trend that has been going strong for years but intensified during the pandemic because of record-low mortgage rates and remote work. Five of the 10 most popular destinations for Redfin.com users who are moving from one metro to another are in Florida, and two are in Texas. Overall, Florida and Texas gained more new residents than any other states in 2022.

Homes in Florida and Texas tend to be much less expensive than the common origins of people moving in. The typical home in Miami, for instance, sells for $515,000, compared with $705,000 in New York, the most common origin of movers to Miami. In Dallas, the typical home sells for $443,000, roughly half the price of Los Angeles, the most common origin for homebuyers moving to Dallas.

Even before the pandemic, Florida and Texas were popular destinations; they gained more new residents than any other state in both 2018 and 2019. For the many Americans who moved to those states before the Supreme Court overturned Roe v. Wade in mid-2022, abortion policies have since changed.

“For some people who moved to a place like Tampa or Dallas in 2019 or 2020 to get a more affordable home, a part of them may now wish they lived somewhere that aligns better with their views on abortion, since its legality is now in the hands of each individual state,” Fairweather said. “But it’s not that simple. They probably still appreciate the relatively low cost of living, and may not be able to afford to move to a different state. Beyond finances, many are entrenched in their jobs, their kids’ school and their communities, and those things make it hard to leave.

Florida and Texas respondents more likely to prefer living somewhere with protections for LGBTQ children than without them

Roughly one-third of Florida (37%) and Texas (33%) respondents would prefer to live in a place where gender-affirming care for children is legal, according to the same Redfin survey. That’s significantly higher than the 21% of Florida respondents and 25% of Texas respondents who would prefer not to live in such a place. Gender-affirming care includes transition surgeries and hormone therapies, among other treatments.

The reality of the legal landscape differs from the preference of many Florida and Texas respondents. Gender-affirming care for transgender youth is illegal in Texas and Florida as of this year, though the latter’s rule is in limbo as it experiences legal challenges to its enforcement.

A similar share of Florida (36%) and Texas (35%) respondents would prefer to live in a place that has laws allowing discussion of LGBTQ topics in schools. That’s higher than the 25% and 28%, respectively, who would prefer not to live in such a place.

Discussion of sexual orientation and gender identity in school is banned via a so-called “Don’t Say Gay” bill in Florida, and a similar bill is making its way through Texas’ state government.

The results from Florida and Texas are comparable to the nation overall.

To view the full report, including charts and more details on the survey, please visit:
https://www.redfin.com/news/housing-survey-florida-texas-legal-abortion