Aug 26, 2023 - Real Estate

Twin Cities homebuyers seek new builds as inventory shrinks

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

The Twin Cities' market for newly built homes is thriving as fewer homeowners want to sell.

Why it matters: A lack of inventory in most markets is fueling buyers' appetite for new construction, real estate experts say.

The big picture: New metro-area home sales rose roughly 62% in July compared to a year ago, while sales of existing homes dropped 13.5%, according to Minneapolis Area Realtors.

  • Sales of new homes are picking up pace in the U.S., but the Midwest is lagging behind the South and the West.

Zoom in: Twin Cities single-family home construction in July posted its first month with year-over-year growth since January 2022, per Housing First Minnesota.

  • Oakdale-based Cardinal Homebuilders has seen traffic jump in recent weeks to view its model home in Cottage Grove, company vice president Tony Wiener tells Axios.
  • "A lot of people are turning toward new builds just because there's more supply on that side right now," Wiener says.

Between the lines: Previously owned listings hitting the Twin Cities market are down nearly 19% compared to July 2022, per Minneapolis Area Realtors.

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, 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.

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

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