National Housing Market Outlook

Homebuilders Finally Reclaiming Market Share

Rick Palacios Jr photo

Rick Palacios Jr

September 6, 2012

After six long years, homebuilders are back in business – literally. New home sales are up 25% year-over-year and 36% from the 2011 bottom. As shown in the chart below, homebuilders are also finally reclaiming market share.

During the downturn, new home sales fell from 16% to just 5% of total home sales while the existing sales to new home sales ratio jumped from 5 all the way to 17. Over the last two years, however, both of these metrics have begun to reverse in favor of the new home market. New home sales now account for 8% of the overall market, while the existing sales to new sales ratio has narrowed to 12.

Despite the fact that the new home market suffered disproportionately compared to the existing home market during the downturn, new home sales are now outpacing resale sales on an annual basis. The turnaround is still fragile, so we are closely watching the conditions that could cause the performance spread to narrow very quickly. These include:

  1. Lack of distressed inventory is artificially restraining existing home sales. While distressed resale sales are down 9% annually, thanks to sloth-like bank foreclosure departments, traditional resale sales are rising at a solid 18% annual clip not far off the new home sales pace of +25%.

  2. Lack of profitable development opportunities could constrain new home sales.

Should banks accelerate foreclosure activity, homebuilders may once again find themselves temporarily losing market share. However, in the long-term, we expect new home sales to grow much faster than resale homes, recapturing their 15%+/- market share of all transactions.

Building Market Intelligence™

Every week, we deliver analysis to over 40,000 subscribers with our Building Market Intelligence™ newsletter. Subscribe to our weekly BMI newsletters to stay current on pressing topics in the housing industry.

About The Author

Rick Palacios Jr photo
Rick Palacios Jr
Managing Principal, Director of Research
Rick oversees and guides JBREC’s research platform while coaching his team daily.

Contact Us

If you have any questions about our services or if you would like to speak to one of our experts about we can help your business, please contact Client Relations at clientservices@jbrec.com.

Products and Services Mentioned

green check icon

Research Membership

Our research services enable our clients to gauge housing market conditions and better align their business and strategic investments in the housing industry. We provide a thoughtful and unique holistic approach of both quantitative and qualitative analysis to help clients make informed housing investment decisions.
green check icon

Geographic Overview of the Public Home Builders

A package designed for those who compare the publicly-traded builders to each other, including securities investors and the builders. Each month we rank each of the publicly traded home builders based on the recent, past, current, and forecasted future performance of their geographic footprint.
green check icon

Real Estate Consulting

Our experienced team of consultants helps clients make sound housing investment decisions. We thrive on their success and work with many clients over multiple years and numerous projects.

Latest Insights

Home Builder M&A Explodes in 2024
Industry Pulse: The mixed-use revival, your true self, and 65 redefined
Dear Consultant: How do you identify the best markets for apartment communities?