New Homes Sales Hold Up Housing Market

By: James Flippin · July 20, 2023 · Reading Time: 2 minutes

Three Stifling Factors

It may seem counterintuitive, but for prospective buyers looking to purchase a home in today’s tough market, the best option might be to buy a brand new home, instead of a used one.

Generally, homeowners who locked in a low mortgage rate over the past several years are less likely to sell right now, leading to steeper competition for existing homes.

Meanwhile, the number of new homes hitting the market is increasing, which could be the saving grace for potential buyers.

Building Boom

In May, the number of new homes under construction hit 1.56 million units, a dramatic 16% increase from April. These new homes made up roughly 33% of all active listings, nearly double the percentage from May 2019.

According to industry data, sales of new homes have been on the rise for seven straight months, leading to increased confidence among builders. In a nutshell, builders are selling houses faster, looking to lay more foundations, and feeling more optimistic about the market in general. All of this could be good news for those open to buying a new home.

Getting a Deal

In today’s market, homebuilders are motivated to sell newly built homes at a good price. To do that, roughly 56% of builders are offering perks such as cheaper loans or rate buydowns. Both of these discounting options are intended to offset the higher cost of a mortgage.

Given a rather rare set of circumstances, you might be able to get a better deal in today’s home market by shopping new, instead of used.

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