New construction of homes keeping housing market 'afloat': Redfin
Total inventory dropped 15% annually in June, reaching an all-time low
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Redfin CEO Glenn Kelman analyzes the state of the housing market after mortgage rates surged past 7% on 'Cavuto: Coast to Coast.'
With the housing inventory shortage dropping to an all-time low, homebuyers are left with few options. One of them is buying a newly built home.
Although homeowners aren't selling due to high mortgage rates, builders are still building. As a result, "new construction is the only option for many buyers," Shauna Pendleton, a Redfin Premier agent in Boise, Idaho, said.
Luckily, the number of newly built homes is growing. New construction accounted for nearly one-third of single-family homes on the market during the second quarter, according to a recent report from Redfin.
That's the highest share of any second quarter on record, the technology real estate brokerage reported. It underscores how new construction is "keeping the housing market afloat amid the severe shortage of existing homes for sale," according to the real estate brokerage.
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Homes in Hercules, Calif., Aug. 16, 2023. (David Paul Morris/Bloomberg via Getty Images / Getty Images)
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During the first quarter, new home inventory reached a near record high of 33.6%. The drop is a typical seasonal pattern, according to Redfin.
However, new home inventory is up slightly from this time last year and is nearly double what it was during the pandemic, which was about 17%, according to the data.
A construction site for new homes in Hercules, Calif., Aug. 16, 2023. (David Paul Morris/Bloomberg via Getty Images / Getty Images)
"The one reliable source of inventory has been the builders. Builders are really making good profits, they're putting homes on the market and they're buying down the interest rate for their buyers so they're able to bring people into the showroom and close the deal," Redfin CEO Glenn Kelman said during an interview Friday on "Cavuto: Coast to Coast."
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Builders aren't constructing as many single-family homes as they did during the housing frenzy in 2021 and early 2022, "but so few homeowners are putting their homes on the market that new homes still make up a huge share of available inventory," according to Redfin.
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In June, total housing inventory reached an all-time low after dropping 15% year over year, according to Redfin data.
The amount of newly built single-family homes for sale in June, though, was up 4.5% year over year. There was an 18% drop for existing homes, according to Redfin data.