Newly constructed homes accounted for 24% of all home sales in the Greater Des Moines area in 2024, a share that has increased each year since 2019, Multiple Listing Service data compiled by Kalen Ludwig shows.

But while sales of new homes make up a larger share of the area’s overall home sale market, new builds are taking longer to sell, with more days on the market than existing homes that are for sale, said Ludwig, a residential real estate agent at Peoples Co. and director of sales and marketing at Diligent Development.

In February, 47%, or 956, of the 1,998 homes listed for sale were new builds, listing data shows.
Homebuilders have had to be “more strategic about carrying inventory and adjusting to slower rates,” Ludwig said during a presentation at this week’s 18th annual Builder & Developer Luncheon held by Peoples Co. and Diligent Development.

“After the dramatic surge of the past few years, we’re now seeing a return to a more rational, balanced market – one that requires careful planning but still offers opportunity,” Ludwig said.

Rising costs for material and labor as well as higher interest rates for home mortgages have made buying a newly built house more expensive than it was pre-pandemic, she said.

In 2024, the average sale price of a new house in the Des Moines area was $449,000, an increase of 30%, or $103,000, from $346,000 in 2019, data compiled by Ludwig shows. During that same period, the average monthly principal and interest payment for a new house sold at the average sale price has soared 80% to $2,365 from $1,313, data shows.

“The number of people who can afford new construction is shrinking,” Ludwig said in an interview.

The costs associated with building a new house likely won’t drop in the foreseeable future, Ludwig said. Inflation continues to be challenging and tariffs on lumber, steel and aluminum will likely push costs even higher, she said during the luncheon.

“Higher [interest] rates are making it tougher for buyers and builders alike,” Ludwig said. “The focus now is keeping new construction attainable.”

Builders are making adjustments to the challenging environment including building smaller houses as well as townhomes and condominiums, Ludwig said. Some are eliminating features in homes like doorbells.

“Builders are continually looking at ways to make building a house more affordable,” she said in an interview.