COVID-19 & your non-freak-out guide to a slowdown

The sector breakdown of the housing industry has notably changed over the past two decades. New homebuilding represented 16% of overall housing transactions in the early- and mid-2000s, but today, it comprises 12%. How does this trend vary over time and market?
The drop in overall market share for new homes, however, is largely due to exogenous factors. Builders and developers are aware of the supply shortage and the opportunities created by today’s demographics, but land availability, land costs, a lack of labor, and strict government regulation are holding them back.
As we all know, homebuilding is local. The 12% new home market share is low nationally, but the percentage varies widely by market. For example, the current new home market share of 17% in Las Vegas is low compared to the 45% capture in 2006.
To look at this trend closer, we studied the top markets in the country to identify where new home sales remain a big part of overall transactions. The metros in the chart below are sorted by highest to lowest based on 2019’s year-to-date new home market share.
From our research, we found:
Our Austin Regional Director, Vaike O’Grady, was not surprised by the high ranking and points out key benefits of Williamson County:
The challenge for Austin, like the rest of the country, is how do builders attract individuals away from the rental market by offering something compelling and reasonably priced. While developers and builders have been working to downsize lots and home offerings in order to contain prices, cost pressures call for more creativity.
In Austin’s case, only 10% of new home closings are attached, and most of those are downtown. Working through different well-executed density solutions can help local builders gain a foothold in the market.
The challenge for Austin, like the rest of the country, is how do builders attract individuals away from the rental market by offering something compelling and reasonably priced. While developers and builders have been working to downsize lots and home offerings in order to contain prices, cost pressures call for more creativity.
In Austin’s case, only 10% of new home closings are attached, and most of those are downtown. Working through different well-executed density solutions can help local builders gain a foothold in the market.