January 26, 2024

min read

New Construction in Review: 2022 vs. 2023

Executive Summary:

  • Starting in 2022 and for the first time since 2013, new construction sold home prices are appreciating above existing home sales.
  • This is in the face of a higher interest rate environment
  • Home builders are offering juicy concessions which may be inflating home prices registered as sales
  • New single family homes being built are the smallest they have been since 2013, down 12% in total square footage
  • The alpha in new construction varies wildly. Reviewing 2022 vs. 2023 existing home sales vs. new home sales, Port St. Lucie, FL and Dallas, TX obtained new construction premiums of 31% and 9% respectively. Both Palm Bay, FL and Madison, WI were on the lower end both at -12%.

How did New Construction Perform Relative to Existing Home Sales?

Since the analysis period began 10 years ago in 2013, 2022 marked a significant period for home builders. For the first time since 2013, new construction home sold prices outpaced existing home price appreciation by +1.91%. This separation grew in 2023 to +2.45%, a 28% YoY gain.

For context, the price per square foot of existing home sales in 2013 was $102.4. This value was $111.4 for new construction sales in 2013.

As of the close of the year in 2023, the median price per square foot of existing home sales was $189.6 while for new construction that is now over $200 at $209.

New Single Family Homes Continue to Get Smaller

While the median size of single family home square footage has remained constant over the last 10 years, with a notable exception being during the pandemic where larger homes were trading hands as consumer preferences shifted from urban environments to suburban environments, new construction footprints have declined over 12% over the last 10 years.

Existing homes are typically smaller than new construction, however that gap is shrinking.

In 2013, the median square footage of existing single family home sales was 1,593 square feet. For new construction, that number was 2,313 square feet, a 45% size gap.

Those numbers in 2023 were 1,607 for existing home sales and 2,036 for new construction. A gap reduction from 45% in 2013 to 27% in 2023.

Which Housing Markets Received the Highest New Construction Premiums in 2023?

New construction premiums vary wildly by market. Our definition of new construction premiums for the purposes of this analysis is the relative YoY growth from 2022 to 2023 between existing single family home sales vs. new single family home sales.

For example, in Port St. Lucie, FL, new single family home YoY price change outperformed existing home sales in Port St. Lucie by 31%.

These 5 markets experienced the highest new construction premiums in 2023:

  • Port St. Lucie, FL: 31%
  • Seattle, WA: 19.5%
  • San Diego, CA: 17%
  • Greeley, CO: 14%
  • Reno, NV: 10.4%

Which Housing Markets Received the Lowest New Construction Premiums in 2023?

These 5 markets experienced the highest new construction discounts in 2023:

  • Palm Bay, FL: -12.3%
  • Madison, WI: -12%
  • Omaha, NE: 10.8%
  • Cincinnati, OH: -10.5%
  • Greenville, SC: -9.5%
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