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Record Share of Homes on the Market Have Yet to be Constructed

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Record Share of Homes on the Market Have Yet to be Constructed

February 25, 2021
New-home construction
Photo: Michael Flippo

According to the Census Bureau, 307,000 homes were listed for sale at the end of January, but only 13.7% of those homes are built. As record low inventory continues amid an insatiable demand for housing, home builders continue to sell new homes that have yet to break ground. And with homes being utilized like never before due to the pandemic, many homebuyers are searching for a new home rather than an existing one. Out of the 307,000 homes listed at the end of January, only 42,000 of those are move-in ready—the lowest share on record, according to MarketWatch. 

Nearly twice as many listings—81,000, or 26.4%—were being offered before ground had been broken.

What It Means: Builders such as D.R. Horton DHI, -2.02%, Lennar LEN, -2.18% and PulteGroup PHM, -1.86% are selling homes like Boeing BA, -1.74% sells airplanes—with a long lead time. As long as demand holds up, builders can count on rising prices and steady work for months ahead. But if demand softens because new homes are becoming unaffordable, watch out below.

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