Newly built homes made up about one-third of single-family homes for sale in March, up from a historical norm of 10% to 20%.


Do you anticipate that “FOMO” will continue to affect the housing market moving forward?


Good question. I think it’s too early to tell. The housing supply remains limited. Housing starts in March were 1.42 million. That’s a healthy number, especially for imports.


Tight Supply Fuels Demand for Newly Built Homes

Recent fall in mortgage rates relieves a source of industry pressure

By Nicole Friedman WSJ

Updated May 2, 2023 1:14 pm ET

Mortgage rates have fallen from the 20-year highs they hit in autumn. PHOTO: ANGELA OWENS/THE WALL STREET JOURNAL

Home builders are enjoying stronger-than-expected business this spring, capitalizing on the recent fall in mortgage rates and the shortage of existing homes for sale.

Last year’s rapid rise in mortgage rates made home purchasing far more expensive for most buyers, slowing home sales and pressuring the home-building industry. Home builders pulled back on land acquisition and new construction.

Now, new single-family home sales are bouncing back with supply tight in the existing-home market. Active listings in March stood at roughly half of where they were four years earlier, according to, in part because higher mortgage rates made many homeowners reluctant to sell and give up their current low rates. (News Corp, parent of the Journal, operates

That low inventory has put home builders in a good spot. Newly built homes made up about one-third of single-family homes for sale in March, according to data from the Commerce Department and the National Association of Realtors. The proportion of newly built homes reached nearly 35% in December, a record in data going back to mid-1982 and up from a historical norm of 10% to 20%.

Matteson Rushing bought a newly built home for just under $300,000 in Oakwood, Ga., this year. PHOTO: DAVID AARON HUNT

Home-builder stocks have surged since the start of the year. The S&P Homebuilders Select Industry stock index is up 17% so far this year as of Monday’s close, outpacing the S&P 500’s 8.6% gain. D.R. Horton, Lennar and PulteGroup, the three biggest U.S. builders by volume according to Builder Magazine, have posted year-to-date stock gains of 22%, 24% and 44%, respectively.

D.R. Horton said last month that net sales orders for the quarter ended in March fell 5% from a year earlier, beating analysts’ expectations. These orders rose 73% from the prior quarter.

“The builders aren’t the only game in town, but they’re more the only game in town than they have been in a very long time,” said Carl Reichardt, a home-building analyst at BTIG.

Buyers are also more comfortable now that mortgage rates have come down from the 20-year highs they hit in the fall, when average rates topped 7%, executives said. The average rate for a 30-year fixed mortgage was 6.43% in the week ended April 27, according to Freddie Mac.

“The consumer has really adjusted to this new rate environment,” said Sheryl Palmer, chief executive of Scottsdale, Ariz.-based builder Taylor Morrison Home, on an earnings call last week. “They no longer believe that rates are going to return to 3% or 4%.”

New single-family homes as a share of all single-family homes for sale Sources: National Association of Realtors (existing homes), Commerce Department (new homes)


Builders ramped up activity during the pandemic-driven housing boom, but they struggled to keep up with demand because of labor shortages and supply-chain problems. As construction times slowed, builders amassed a large backlog of homes that were under construction but not yet completed.

Builders were aggressive to cut prices and offer incentives, especially mortgage-rate buydowns, to attract buyers by making purchases more affordable.

This year’s improved backdrop helped new single-family home sales rise 9.6% in March from the prior month on a seasonally adjusted basis, according to data from the Commerce Department. Sales rose month-over-month in the Northeast, West and Midwest, while falling in the South, the biggest region for new-home sales.