Homebuyers Turn to the New Home Market
Despite the cooling housing market, inventories of existing homes for sale have barely budged from all-time lows experienced during the pandemic, according to the Joint Center for Housing Studies (JCHS). As a result, homebuyers have increasingly turned to the new home market which comprises a higher share of available inventory. Meanwhile, in an attempt to alleviate growing affordability pressures on buyers due to increased interest rates, homebuilders are offering incentives to buyers in the form of interest rate buydowns. These two factors have combined to markedly increase the attractiveness of the new home market for many buyers.
According to the recently released State of the Nation’s Housing 2023, the number of existing homes available for purchase today remains near the record lows set in early 2022. Indeed, there were just 970,000 existing homes on the market in March 2023, up 4% from the year before but down 42% from the same month in 2019, a period when inventories were already historically low. In terms of the months of supply, the amount of time it would take to sell all homes on the market at the current sales rate, inventories have risen only slightly more, ticking up to 2.6 months of supply in March, up from 2.0 months in 2022 but still below the 3.8 months posted in 2019. Existing inventories have remained low even through the second quarter of this year, a time when homebuying usually peaks.