According to data from Realtor.com, 2024 was an exceptional year for new construction as 1,020,600 new single-family homes reached the real estate market, an increase from 998,900 in 2023. The study shared that for-sale inventory is back to around the same levels pre-pandemic in the South and the West, with new builds credited for the comeback.
The findings noted that the South is the largest regional market for new construction listings, with 23% of the listings on the market being newly built and the average existing home listed being 39 years old. In the West, new-construction homes account for 14.4% of the market with the average existing home on the market being 40 years old. The median listing price for a new build across the country was $449,967 in the final quarter of 2024, a drop of 0.7% annually. The study found that newer homes are smaller and more affordable with builders focusing on improving the supply gap in the market.
“The continued boom of home construction in the South, particularly in states like Texas, Florida, and Georgia, comes down to a combination of economic growth, migration patterns, and favorable business environments,” said Austin Hair, a real estate expert and founder of Eperon Capital. “People and businesses are moving to the South in record numbers due to lower taxes, more affordable housing, and a generally lower cost of living compared to the Northeast.”
The economic conditions in the South and West regions have attracted businesses and people looking for change. With the influx of new residents, developers have started building new homes to make housing options available. Hair added, “States like Florida and Texas also offer pro-business policies, attracting major employers that create jobs and drive housing demand.”
Mark Lumpkin, a real estate investor and founder of STR Cribs, attributed the growth in the South and West to improved economic conditions combined with fewer regulatory barriers. He noted that these regions have attracted developers seeking out lower land costs and easier permitting processes to build master-planned communities and employing non-standard options like modular construction and energy efficiency. With developers seizing the opportunity to build with fewer regulations, it makes sense that new properties are reaching the market.
“Affordability is the driver of continued interest and growth of new home construction in the South and Southwest,” shared Alex Vidal, a real estate professional and president of ERA Real Estate. “We continue to see many from higher priced markets looking to relocate with many taking advantage of record-level equity as they can become cash buyers in the South and Southwest.”
With many residents moving to these regions for affordable housing options, developers are building new homes to provide additional inventory. As more people move to the South and West regions, developers will have to continue building homes to ensure that the inventory keeps up.
Vidal also brought up that the high demand from those looking to migrate to these regions combined with limited inventory, has led to an increased demand for new homes. Then you have those in these regions who want to “move up” in their unit but are limited by inventory options. With potential homebuyers looking for better housing options, it’s clear that developers will have to continue building different types of properties to match market expectations.
Hair pointed out how the warmer climate and lifestyle appeal to retirees and remote workers looking for more space and a better quality of life. This migration for improved living conditions has impacted the entire housing market in these regions and increased the number of new builds as demand shoots up.
“The combination of strong migration, limited new supply due to financing challenges, and sustained rental demand makes the South an attractive market for real estate investors,” said Hair. He also brought up how the South remains a prime location for short-term rentals with cities like Orlando, Florida; Nashville, Tennessee; and Austin still seeing strong tourism demand. With investors spotting opportunities in the South and West, developers are capitalizing on this by building additional homes for the region.
“While an influx of new homes can necessarily take the pressure off prices in the short term, it should be noted that over the longer term, such developments tend to create more robust and diversified housing markets, as better infrastructure and community amenities help attract further investment,” said Humberto Marquez, a real estate strategist and founder at GetHomeCash.
It’s important to address the impact of these new builds on the housing market in the region. While it’s difficult to predict precisely what will happen to these areas with new builds going up, Marquez believes that the new construction will lead to refreshed local economies with new business opportunities.
Hair elaborated, “Those who can secure properties now, even in a higher-rate environment, are likely to see strong long-term gains as interest rates eventually ease and demand continues to grow.” He believes that home values will go up in the long run as the new homes are sold and others look to enter the market in the future.
As interest rates and inventory issues continue to play a pivotal role in housing prices nationwide, it’s worth paying attention to how the new homes in the South and West will impact respective regional real estate markets.
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