San Diego's new builds can't meet housing demand

The market for newly built homes is thriving nationwide as fewer homeowners want to sell, but new-construction options for San Diegans remain limited and expensive.

What's happening: First-time home buyers may be wooed by the financial incentives and designs of new developments, rather than the existing housing supply, Frank Powell, president for the San Diego Association of Realtors, told Axios.

Why it matters: With U.S. mortgage rates at a 22-year high, golden handcuffs are locking up housing inventory, fueling buyers' appetite for new builds, according to real estate experts.

• But San Diego is struggling with a severe housing shortage and there aren't enough new homes being built to keep up with demand, especially those that are affordable, Powell said.

The big picture: Sales of existing U.S. homes, the great majority of those sold nationally, slid nearly 17% from a year earlier, while new home sales soared almost 32%, per July figures.

Zoom in: The number of new homes sold in the West rose 60% in July compared to a year earlier, per U.S. Census data.

• Meanwhile, existing home sales fell nearly 13% during that time, according to regional figures from the National Association of Realtors.

Reality check: In San Diego, there's a market for those who want to buy new, custom homes, but there aren't sprawling developments popping up like in other cities, according to Powell.

• And while existing home sales are down almost 20% from last year locally, there hasn't been a crash as prices are higher and realtors still get multiple offers per listing.

• It's slower because there's nothing to sell with inventory down, he said.

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

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

What we're watching: Some builders are selling smaller, more affordable houses to lure first-time buyers.

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