New-build demand in the US enjoys buoyant spring

New-build demand in the US enjoys buoyant spring

The shortage of supply in the resale market and the recent dip in mortgage rates have brought good news for new-build demand in the US. In March, this sector accounted for around a third of single-family home listings, a record high. In addition, new-build sales surged in tandem with a rise of 3.2% in median prices.

New-build demand in the US accounts for one in three listings

Around one-third of the available inventory consisted of new-build properties in March. This market proportion is one of the highest ever, after a record 35% in December.

Historically, new-build homes have made up between 10% and 20% since 1982. However, new-build demand in the US has soared in recent months on the back of a lack of supply and a drop in mortgage rates.

Uptick in sales

As a result, sales of new builds rose in tandem with demand. In March this year, there were 683,000 transactions in this sector, an increase of 9.6% compared to February. In annual terms, however, it’s slightly below the rate for March 2022, when 707,000 new homes changed hands.

Industry analysts report that homebuyers continue to suffer from the shortage of property. In addition, they’re now more accustomed to the highest mortgage rates and as a result, more likely to take out a loan. Consequently, demand remains at all-time highs.

New-build inventory levels

The March surge in sales led to a 9.5% drop in the supply of new builds in the US, although overall inventory sits at 7.6 months’ supply. Analysts regard this as healthy, particularly when compared to levels generally.

However, the 7.6 months’ supply is not countrywide, and inventory stands at considerably lower levels in the nation’s most popular property spots. Florida is a case in point, particularly in areas in high demand, such as Sarasota and Charlotte County in Southwest Florida.

Rise in new-build prices

New-build demand in the US has pushed prices up. As a result, the median price for a new single-family home reached US$449,800 in March, up 3.8% on February prices and up 3.2% in 12 months.

52% of homes on the market had price tags between US$300,000 and US$500,000, although a sizeable proportion (37%) were more expensive. Just 10% of the supply fell within the so-called entry-level price of less than US$300,000.

(Source: National Association of Home Builders)