A fresh infusion of new homes hit the market as the spring home buying season kicked off in March, adding a touch of relief to a housing market that’s been short on, well, homes. Still, the most cash-strapped buyers—typically first-timers—aren’t likely to be able to take advantage of the new additions.
About 621,000 newly constructed homes were sold in March—up 5.8% from February and 15.6% from the same month a year ago, according to a joint report by the U.S. Census Bureau and U.S. Department of Housing and Urban Development. Realtor.com® looked only at the seasonally adjusted numbers, which have been smoothed out over 12 months to account for seasonal fluctuations.
But the majority of those residences with that new-home smell are well out of the price range of many first-time buyers. That’s because high land, labor, materials, and regulatory costs drive up prices on these homes.
“The good news is, new home sales are surging,” says realtor.com Senior Economist Joseph Kirchner. “But the bad news is, the percentage of affordable homes” under $200,000 isn’t going up as well.
The median price of all new homes was $315,100 in March. That’s 33.3% higher than the median price of an existing home, although the lack of supply of all types of housing has driven up prices across the board. Existing homes sold for a median $236,400 in March, according to the most recent National Association of Realtors report.
Home builders doubled the number of abodes costing $150,000 or less that hit the market in March, compared with the previous month and year. But these inexpensive homes still only make up a minuscule percentage of the new home market—just 6%.
“A lot of that [increase] is because there are more homes [going up],” Kirchner says.
But the percentage of new residences costing between $150,000 and $200,000 went down—from 13% in February to 10% in March. Only 16% of all the new homes on the market in March cost less than $200,000.
The majority of new homes cost between $200,000 and $299,999 (about 28%), and $300,000 and $399,999 (about 24%). About 13% were between $400,000 and $499,999; 14% were between $500,000 and $749,000; and 5% were luxury homes costing $750,000 and up.
The most new homes to hit the market in March, about 323,000, were in the South, according to the seasonally adjusted numbers in the report. That was an increase of 1.6% from February and 5.9% from March of 2016.
Quite a few new abodes also hit the market in the West. About 175,000 homes were for sale or sold in March, up 16.7% from the previous month and 32.6% from the same month a year ago.
About 84,000 new homes went up for sale in the Midwest, down 4.5% from February but up 23.5% from March 2016.
And the Northeast received an additional 39,000 new homes in March. That’s up 25.8% from February and 21.9% from the same month a year ago.
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