Builders pull back as more homeowners list, shifting the supply landscape
The share of newly built homes for sale in the United States dropped to its lowest level in four years this August, as the market saw a resurgence in existing home listings and builders slowed new projects to manage unsold inventory.
According to Redfin, newly built homes accounted for 26.8% of single-family homes on the market in August, down from 28.2% a year ago and 30.6% two years prior.
While this is still well above the pre-pandemic range of 15% to 20%, the trend signals a notable shift in the housing supply dynamic.
Inventory shifts as homeowners return
The pandemic years saw a surge in new home construction, with the share of new builds peaking at nearly 35% in 2022. This was largely driven by a shortage of existing home listings, as many owners were locked into ultra-low mortgage rates and reluctant to sell.
Now, that lock-in effect appears to be easing. “More Americans are listing their homes, with life circumstances motivating people to sell, and homeowners hoping buyers jump on slightly lower mortgage rates,” Redfin’s report noted.
Homes are also lingering longer on the market, with a median of 50 days to sell in September—the slowest pace for that month since 2016.
Builders slow the pace, offer incentives
On the other side, builders have started to pull back. Housing starts fell 6% year over year in August, while completions dropped 8.4%, according to the US Census Bureau.
“Builders are hesitant to start new projects because in today’s buyer’s market, it doesn’t make financial sense,” said Jesse Landin, a Redfin Premier agent in San Antonio.
“The market is oversaturated with new construction, so much so that some local builders are laying off workers—something I’ve never heard of happening before.”
To move existing inventory, many builders are offering incentives such as mortgage-rate buydowns, closing cost coverage, and new appliances, especially in markets like Texas, Utah, and Florida.
“Builders are desperate to sell,” said Roze Swartz, a Redfin Premier agent in Houston.
“Prices are lower than usual, insurance costs are lower than for existing homes, and buyers have the power because there’s more supply than demand. Builders are buying rates down to 4% or 5% and throwing in $10,000 in closing costs; plus, buyers can breathe easy knowing their home has a new roof, new HVAC system, new everything.”
On the other hand, US homebuilder confidence rose in October, hitting its highest point since April, as lower mortgage rates gave the market a small boost despite ongoing affordability and economic concerns.
The NAHB/Wells Fargo Housing Market Index climbed five points to 37, marking the biggest monthly increase since early 2024. Although still below the key level of 50 that signals optimism, this jump showed builders are feeling slightly more positive after months of little change.
For mortgage professionals, the changing mix of new and existing homes—and the push from builders to offer deals—is creating new challenges and opportunities. With fewer new homes and more existing ones on the market, both buyers and lenders will need to act strategically in the coming months.
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