High Prices Deter Interest in New Homes
Rising home prices are causing prospective home buyers to reexamine their interest in new homes, according to the latest survey results from NAHB’s latest Housing Trends 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 of buyers who are ambivalent between new or existing construction has gone from 27% to 34% during this period.
Regionally, 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.
Rose Quint, NAHB assistant vice president for survey research, provides more insight in this post from Eye on Housing.