With existing homes almost non-existent, buyers turn to new ones

U.S. homebuyers are now more likely to purchase new than at any time since the 2008 crash. They don’t have a lot of choice: The supply of existing homes is at a record low.

New-home sales made up 11 percent of the total market in March, according to an analysis by Veritas Urbis Economics LLC of government data released Tuesday. That’s close to the 10-year high of 11.1 percent, reached in November.

The supply crunch has been years in the making. Now, as demand surges with the improving job market, many single-family houses that might have been purchased by first-time buyers are instead being rented out by investors who bought cheap after the crash. Also, baby boomers are living longer and more often staying put instead of downsizing.

“When inventory is this low, homebuyers turn to new homes,” said Ralph McLaughlin, chief economist for the real estate consultancy. “Those are homes that predictably come on the market.”

The share of new-home sales peaked at about 17 percent in June 2003 during a building boom, then bottomed in 2010 at 5.4 percent. At the time, unemployment was high and the property market was clogged with unsold foreclosures. Prices for previously owned homes have since surged as buyers were left to battle for a scarcity of listings.

There were 1.67 million U.S. homes for sale in March, down 7.2 percent from a year earlier and the lowest for that month in data going back to 1999, according to the National Association of Realtors.

In the Indianapolis area, builders saw more demand for new homes in the first quarter than they have since 2006.