Preference for newly constructed homes skyrocketed in 2020, as buyers looked for homes with more square footage and amenities in which to work remotely, school children, exercise, etc. By the fourth quarter of 2020, 42% of prospective buyers preferred new construction. Since then, however, rising new home prices (driven by a 31% increase in the cost of building materials) have eroded the preference for new homes. By the first quarter of 2022, and after falling for five straight quarters, the share of buyers looking for new construction has returned to pre-pandemic levels: 19%.
New construction has lost preference in every region of the country. From peak to now, the share of buyers who’d prefer a newly-built home dropped in the Northeast (60% to 19%), Midwest (27% to 14%), South (33% to 21%), and West (51% to 24%).
** Results come from the Housing Trends Report – a research product created by the NAHB Economics team with the goal of measuring prospective home buyers’ perceptions about the availability and affordability of homes for-sale in their markets. The HTR is produced quarterly to track changes in buyers’ perceptions over time. All data are derived from national polls of representative samples of American adults conducted for NAHB by Morning Consult. Results are seasonally adjusted. A description of the poll’s methodology and sample characteristics can be found here. This is the second in a series of six posts highlighting results for the 1st quarter of 2022.
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In my market, Redding, CA, the cost of materials, coupled with the cost of permits and time to process is putting a huge demand on established housing, and pushing everyone on the lower rungs of the ladder off. Add to that investors buying SFR homes and holding them for long term rentals has made it even worse. Rents are at all time highs and the demand far outpaces supply. Unless the powers that be cut some of the regulations and time frames, I don’t see this getting better.