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Fewer new homes were sold this year—and that’s not likely to help the worsening housing crunch.
Only about 593,000 newly constructed homes were sold in January, according to a joint report by the U.S. Census Bureau and U.S. Department of Housing and Urban Development. That’s down 7.8% from December 2017 and 1% from January 2018.
(Realtor.com looked only at the seasonally adjusted numbers in the report. These have been smoothed out over 12 months to account for seasonal fluctuations.)
“Most of that decline in sales is at the upper end of the market, among homes over $500,000,” says Senior Economist Joseph Kirchner of realtor.com®. “We may be seeing a shift by builders to produce more moderately priced homes. One of the indications is the drop in the median price. We’re [also] hearing anecdotally from builders and Realtors® this is happening.”
The median price of a new home did fall a bit, to $323,000. That was a nearly 4.1% dip from December, but up almost 2.5% from a year ago.
Still, buyers looking for a real bargain should set their sights instead on an existing home (i.e., one that has previously been lived in). The median price of an existing home was 34.3% less, at $240,500, in January, according to National Association of Realtors® data.
That’s because land and materials costs for new homes are on the rise. There is also a national shortage of skilled construction labor, leading to delays and higher wages. Increased regulations and a harder time obtaining financing have also added to the higher prices of newly constructed residences.
Only about 12% of new homes sold in January were more affordable, with prices of $199,999 and below. An additional 31% were between $200,000 and $299,999, while 25% were between $300,000 and $399,999 and 15% were between $400,000 and $499,9999. An additional 16% were $500,000 and up.
January sales of new homes were down the most in the Northeast, where they dropped 33.3% from December and 44.2% from the same month a year earlier.
They also fell sharply in the South, plummeting 14.2% from the previous month and 10.9% from the previous year.
Sales were up in the West, rising 1% from December and 33.1% from January 2018. In the Midwest, they shot up 15.4% month over month and 2.7% year over year.
The post As New-Home Sales Decline, Their Price Dips as Well appeared first on Real Estate News & Insights | realtor.com®.