To Buy a New or Previously Owned Home

Posted in Economist Commentaries, by on September 29, 2016

Since 1981, the Profile of Home Buyers and Sellers has collected data on whether home buyers purchased a new home or a previously constructed existing home. For many people around the country, new home construction simply does not exist in their area and moving to a location with new homes becomes a geographic hike that isn’t feasible. In addition, new homes often cost more than one that someone has lived in before. In the 2015 Profile of Home Buyers and Sellers, the typical buyer purchased a new home for $277,000 compared to an existing home for $209,000. So what is the breakdown of new and existing homes purchases?

Most recently, from 2011 to 2015 new home purchases have been the lowest consistent levels seen since NAR started collecting the data 35 years ago at 16 percent. In 2015, there were 5.25 million existing homes sold compared to only 501,000 newly constructed single-family homes (condos not included).

In the last few years, there has been a lack of inventory of homes on the market and builders have been reluctant to start new development since the recent market downturn despite historic low mortgage interest rates. In 1981 and 1985, new home purchases were similarly low at only 18 percent of all homes purchased and were at their lowest in 2010 at 15 percent.

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In 1989, new home purchases were at a peak at 29 percent of all homes purchased that year, preceded by a robust year in 1987 at 27 percent. In 2003, we saw another spike in new home purchases to 28 percent of all homes bought that year. From 2004 to 2008, new homes fared well between 21 and 23 percent.

Conversely, existing homes sales accounted for 84 percent of all homes sold from 2011 through 2015. Previously owned homes sold at a peak in 2010 at 85 percent and at a low in 1987 and 2003 at 71 and 72 percent respectively.

To follow this series as we discuss the findings of 35 years of profile data, check out the hashtag #NARHBSat35 on your social channels. NAR Research will be releasing trend line data since 1981 to celebrate 35 years of home buyer and seller demographic research