It’s a good time to work in a new-home niche as new-home construction becomes more attractive to home shoppers since the pandemic. The number of existing homes for sale has dropped to historic lows while builders are ramping up production. More than a quarter—25.7%—of single-family homes for sale during the first quarter were new-construction homes, according to a national analysis of real estate data from Redfin.
“Building homes has become more attractive and profitable during the pandemic due to record-low mortgage rates and red-hot homebuyer demand,” says Taylor Marr, Redfin’s lead economist. “At the same time, many homeowners have opted to stay put and refinance or remodel their existing homes instead of selling them, allowing new-construction homes to take up a larger portion of the market.”
Single-family housing starts jumped 41% in March compared to a year earlier, according to U.S. Census Bureau data. Meanwhile, the number of existing homes for sale fell about 28% in March compared to a year ago, according to the National Association of REALTORS®.
Buyers may be drawn to new construction as bidding wars become commonplace in the existing-home market. Competition tends to be less in the new-home market. However, that may be changing. Ryan Aycock, a Redfin market manager in Salt Lake City, reports newly built homes in his area have waitlists 90 buyers deep.
Prices are rising for new homes, too. The increase in lumber prices over the past year has added $35,872 to the price of an average new single-family home, according to new housing data from the National Association of Home Builders. The median sales price of a newly built home in March was $330,800.