New home sales peaked at the height of the housing boom in 2005. But following those all-time highs, sales plummeted and the subsequent recovery took more than a decade. In fact, annual sales still haven’t reached the highs of 15 years ago – though they’ve largely made up the lost ground. In one way, however, new home sales are doing better than ever. According to an analysis of recent sales, 25.7 percent of homes sold during the first quarter of 2021 were newly constructed homes. That’s up from 20.4 percent last year at the same time. It’s also the highest share of total home sales on record. So what’s behind the increase? Well, for one, there are fewer existing homes available for sale. Many Americans have recently refinanced or remodeled their homes and are staying put. That means, new construction is filling in where existing inventory is lacking. The other reason is buyer demand. With low mortgage rates boosting the number of buyers, home builders have incentive to build more, and they are. This combination of low mortgage rates, high buyer demand, and fewer existing homes, has fueled a boom in the new-home market, which will likely stay hot for the foreseeable future. (source)
