High Prices Reduce Interest in New Construction
At the start of the COVID-19 pandemic, interest in new construction grew substantially with many buyers looking for custom builds and new homes, but strong gains in home prices have driven interest back down for the third quarter of 2021, according to the NAHB’s Eye on Housing report.
In the first quarter of 2018, only 15% of prospective buyers were looking for a newly built home. The onset of COVID-19 propelled that share up to 42% by the final quarter of 2020, but strong gains in new home prices have driven it down for the last three quarters, reaching 32% in the third quarter of 2021. Meanwhile, the share who is ambivalent between new or existing construction has gone from 27% to 34% during this period. These results come from NAHB’s latest Housing Trends Report.
The share of buyers who would prefer a newly built home declined dramatically between the first and third quarters of 2021 in the Northeast (60% to 34%) and the West (51% to 39%). In the Midwest, the share peaked in the final quarter of 2020 at 27%, fell to 19% by the second quarter of 2020, but then rose slightly in third quarter to 21%. A more consistent 30% to 33% of buyers in the South have preferred a new home in the past five quarters.