The desirability of new homes continues to grow. Faced with the alternative of choosing between an existing home and a newly built home, 61% of home buyers in a recent NAHB study* indicated a new home is their first preference. That marks the highest share of buyers leaning toward a new home since 2007, when 63% of buyers preferred new construction.
To compare, in 2018, 54% of buyers preferred a new home. The share jumped to 60% in 2020, as the COVID-19 pandemic reduced existing inventory and made many buyers afraid of touring occupied homes. By 2023, high mortgage rates had ‘locked-in’ millions of existing homeowners in their homes, and that supply vacuum left new homes as the only available option for many buyers.
An important fact to highlight is that in 2023, the price of a typical new home was only 9% higher than the price of a typical existing home ($428,200 vs. $394,100). In sharp contrast, that gap was four times larger in 2013, when new homes cost 36% more than existing homes ($268,900 vs. $197,400).
New homes can be custom-built on the buyer’s lot, or they can be built-for-sale (including the land). Over the last two decades, the NAHB study* shows a rising trend in the share of buyers who would prefer a new home built-for-sale, from 22% in 2003 to 40% in 2023. In contrast, the share who would prefer a custom-built home declined from 49% to 21% during this period.
* What Home Buyers Really Want, 2024 Edition sheds light on the housing preferences of the typical home buyer and is based on a national survey of more than 3,000 recent and prospective home buyers. Because of the inherent diversity in buyer backgrounds, the study provides granular specificity based on demographic factors such as generation, geographic location, race/ethnicity, income, and price point.
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