High Prices Impacting Future New Home Demand
In the first quarter of 2018, only 15% of prospective buyers were looking for a newly built home. The onset of COVID-19 propelled that share up to 42% by the final quarter of 2020, but strong gains in new home prices have driven it down for the last three quarters, reaching 32% in the third quarter of 2021. Meanwhile, the share who is ambivalent between new or existing construction has gone from 27% to 34% during this period. These results come from NAHB’s latest Housing Trends Report.
The share of buyers who would prefer a newly built home declined dramatically between the first and third quarters of 2021 in the Northeast (60% to 34%) and the West (51% to 39%). In the Midwest, the share peaked in the final quarter of 2020 at 27%, fell to 19% by the second quarter of 2020, but then rose slightly in third quarter to 21%. A more consistent 30% to 33% of buyers in the South have preferred a new home in the past five quarters.
* The Housing Trends Report (HTR) is a research product created by the NAHB Economics team with the goal of measuring prospective home buyers’ perceptions about the availability and affordability of homes for-sale in their markets. The HTR is produced quarterly to track changes in buyers’ perceptions over time. All data are derived from national polls of representative samples of American adults conducted for NAHB by Morning Consult. Results are seasonally adjusted. A description of the poll’s methodology and sample characteristics can be found here. This is the second in a series of six posts highlighting results for the third quarter of 2021. See previous posts on plans to buy.