Interest in New Homes Falls, High Prices Likely to Blame

Fewer prospective buyers are looking to purchase a newly constructed home, likely a result from ongoing price increases, says the National Association of Home Builders. In the fourth quarter of 2020, 42% of prospective buyers wanted to buy a new home, but that share dropped down to 38% then 33% in the first two quarters of 2021. The share of prospective buyers looking to purchase an existing home increased to 35% from 2020’s fourth quarter share of 31%, and the share of buyers who wanted a new or existing home went from 27% to 32% during the same time period.

Regionally, the share of buyers who would prefer a new home peaked in the Northeast and West in the first quarter of 2021 at 60% and 51%, respectively, before falling to 34% and 40% in the second quarter of the year. In the South, the share peaked in the third quarter of 2020 at 33%, but is now at 30%. In the Midwest, the share peaked in the final quarter of 2020 at 27%, but is now down to 19%.