Aug 26, 2023 - Real Estate

Denver's new builds can't meet housing demand

Illustration of construction workers analyzing a house on top of a stack of money.

Illustration: Trent Joaquin/Axios

New Denver homes are popping up and selling quickly, but supply still can't match demand.

Why it matters: As U.S. mortgage rates hit a 20-year high, golden handcuffs are locking up Denver's housing inventory, and that's fueling buyers' appetite for new builds, according to real estate experts.

The big picture: Sales of existing U.S. homes — the great majority of houses sold nationally — slid 19% from a year earlier, while new home sales soared 24%, according to June figures.

What they're saying: "What we're seeing in Denver is the new construction tends to be on the outskirts of town," Kelly Moye, a local Compass agent and spokesperson for the Colorado Association of Realtors, tells Axios.

  • Northern Colorado, Southern Colorado and the Eastern Plains areas are now popular for builders because there's water and more land, so "they're able to provide a really nice new home for less money," Moye says.

Axios Denver reader Lauren Watkins said she started looking at houses in March and considered a new build, but ultimately purchased a home in Centennial.

  • "We decided we would rather be in a fixer-upper in a nice neighborhood that was established, rather than a new home in an 'okay' area that was further away from the city that lacked trees and neighbors," she said.

Between the lines: The number of listings coming onto the Denver metro market is down roughly 29% compared to June 2022, per Redfin.

State of play: The new-build boost comes after rising rates curbed pandemic-driven home buying demand.

  • Builder confidence is now at its highest level since June 2022, having declined every month that year, according to the National Association of Home Builders.

What we're watching: Some builders are offering smaller, more affordable houses to lure first-time buyers, Axios' Matt Phillips reports.

Data: U.S. Census Bureau; Chart: Axios Visuals
Data: U.S. Census Bureau; Chart: Axios Visuals

The number of new homes sold in the West rose 35% in June compared to a year earlier, per the U.S. Census Bureau.

What's happening: New homes comprised nearly a third of total inventory in May, exceeding their typical 10%-to-15% share, according to chief economist Robert Dietz at the National Association of Home Builders.

Go deeper: Old houses now cost as much as new houses


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