According to a recent Redfin report [1], the housing market is on the mend. The report revealed that the sales of new-construction homes rose 10% (year over year) during this past month of July, bringing sales levels right up to rival those of pre-Coronavirus sales levels.
Experts attribute this uptick in the increase in American homebuilding that occurred before the pandemic, which they say is now the catalyst driving the rise in new-home sales. Also key factors in the uptick, according to experts? Housing migration patterns that find more and more people moving to the suburbs and rural areas, as well as historically low mortgage rates in the market today. As for existing homes, those numbers rose far less (5.3%).
Also highlighted in the report includes news regarding the supply of new-construction homes for sale, which was revealed to have decreased 28.4%. This drop is the greatest dip experienced on the market in more than 7 years (since 2013 at least). But even more of a drastic drop was that of the inventory in existing homes in July, which hit a record decline of 37%. Thanks to this pretty severe shortage, newly-built homes now represent 1 out of every 5 houses for sale in America. This is the first time in history that newly-built homes have enjoyed such a large portion of the for-sale market.
Redfin senior economist Sheharyar Bokhari commented on this tightening of supply: “The shortage of both new and existing homes is intensifying across America right now as record-low mortgage rates drive more demand, but the shortage of new homes is less severe due to a surge in construction right before the pandemic.”
Bokhari added: “As a result, sales of new homes are growing faster than sales of existing homes. Sales of new homes are also on the rise because the coronavirus pandemic is fueling interest in the suburbs—where there tends to be more space to build new homes.”