handful of existing housing

New homes are only a small percentage of the existing homes.

Yes, it is correct English.

New homes are a part of existing housing because they exist--that they are new doesn't change the fact that they exist. The expression "only a handful" means that they represent only a small percentage of existing housing, as Roger has pointed out.

The context is somewhat insufficient. The regulation which is referred to must apparently only affect newly built housing, and not all existing housing, and as the claim is that new housing is "only a handful." So, the sentence says that of all the housing which exists, newly built housing is only a small proportion, and as the regulation (one infers) only applies to newly built housing, it is only effective with a small proportion of all existing housing.