New Home Sales Surged to Unexpected Record Share in Q3

Industry News,

Originally Published by: Builder Online — November 1, 2023
SBCA appreciates your input; please email us if you have any comments or corrections to this article.

In the third quarter, 30.6% of U.S. single-family homes for sale were new construction, according to a recent report from Redfin.

The real estate brokerage reports that is the highest share of any third quarter on record and up from 28.9% one year earlier and 25% two years earlier.

“Sellers are facing tough competition from home builders, who are sometimes offering buyers up to $30,000 worth of concessions,” says Kim Lotz, a Redfin premier real estate agent in Phoenix. “With that kind of money, a buyer can cover closing costs, home upgrades, and buy down their mortgage rate. In some cases, people who purchased a house from a builder a year ago are selling and competing against that same builder for buyers."

Although mortgage rates have surged to a 23-year high and pushed a lot of buyers to the sidelines, many of today’s buyers are opting for new-construction homes because of concessions like mortgage rate buydowns.

Purchases of new single-family homes jumped 12.3% last month—the fastest pace since early 2022.

“New-home sales blew past expectations in September as builders continue to gain market share in a limited resale supply environment,” said Nik Scoolis, manager, housing economics for Zonda, on the latest new-home sales report from the Census and HUD. “As sales grew, prices and unit size continued to fall in attempts to offset the impact of rising rates. Looking forward however, with rates fluctuating between 7% and 8%, we expect the recent sales level to taper out some as buyers grapple with yet another affordability level.”