Soaring interest rates have forced a growing share of would-be home sellers to hold off on listing their homes, and the resulting drop in existing home supply is leading to stronger demand for new homes. The most recent Housing Trends Report from NAHB revealed that between the final quarter of 2022 and the second quarter of 2023, the share of buyers looking to buy new construction rose from 20% to 25%, while the share interested in existing homes fell from 39% to 36%, Eye on Housing reports.
Between the final quarter of 2022 and the second quarter of 2023, all four U.S. regions saw an uptick in buyers interested in new homes, with the largest increase reported in the West.
Higher interest rates have led millions of existing homeowners with mortgages under 4% to postpone plans to list their homes for sale, and for many prospective buyers, that supply vacuum has left newly built homes as the only game in town. That is the backdrop behind the strengthening of interest for new homes.
In the West in particular, the share jumped from 21% to 32%, followed by the Northeast (20% to 24%), the South (20% to 23%), and the Midwest (15% to 18%).
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