Homebuyers frustrated with bidding wars are turning to new construction, which now comprises the biggest share of the property market in U.S. history.
In the first quarter, homebuilders produced roughly 1 out of every 4 single-family home listings, the biggest share on record, according to data from brokerage Redfin Corp.
The pandemic housing rally has fueled homebuilders in recent months, with an index that tracks shares of companies in the industry surging nearly 40% this year.
Homebuilders are stationed right where they need to be, in the affordable cities and suburbs where buyers are heading for more space and construction is ramping up.
El Paso, Texas, has the highest share of new construction homes at 53%, followed by Boise, Idaho, with 47% and Houston and Raleigh, North Carolina, each with about 35%.
While builders have increased production, their share of the market has grown, in part, because few homeowners are listing properties, creating the worst inventory shortage in history.
Homebuilders are coming off a decade of meager production and a pandemic rally that drained the market of inventory.
While last decade’s bubble ended in disaster for builders, they’re unlikely to get ahead of demand this time because they face rising materials costs and limited supplies of labor and finished lots, said Redfin Chief Economist Daryl Fairweather.
“It would be a good thing if they built more homes this decade,” he said.