Looking for a deal on a newly constructed home? Well, you’re not likely to get one if current trends continue.
The median price for a new home hit its highest level in May, as builders put up fewer affordable homes, priced under $300,000, compared with the same month a year earlier, 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 in the report. These have been smoothed out over 12 months to account for seasonal fluctuations.)
But the higher price tags didn’t dissuade buyers who purchased 610,000 brand-new homes in May—an increase of 2.9% from April and 8.9% from May 2016.
The median price of a newly built home was $345,800 in May—the highest it’s ever been. The price rose nearly 11.5% from April and 16.8% from the same month a year earlier.
“Builders are focused on the mid to upper end of the housing market,” says Senior Economist Joseph Kirchner of realtor.com. “It means that it will be more difficult to find more affordable homes for first-time buyers, millennials, and low-income people.”
That’s because builders must contend with higher land, construction worker, and material costs these days. It’s also harder for builders—smaller ones in particular—to get financing on these projects.
Only about 6,000 newly constructed homes priced between $150,000 and $199,999 were sold in May. That’s up a little from 5,000 in April, but well shy of the 9,000 that buyers closed on in May 2016. Buyers also scooped up fewer homes in the $200,000 to $299,999 price range, with just 14,000 sales. That’s down from 22,000 sales in April and 16,000 sales in May 2016.
(About 2,000 homes priced below $150,000 were sold in May—up from 1,000 in April and the same number, 2,000, as the previous year.)
However, the number of properties in the higher price ranges rose sharply—despite surging demand from cash-strapped buyers for lower-priced abodes.
New homes were nearly 36.8% pricier than existing ones (i.e., homes that have been previously lived in) in May. The median price of an existing home reached an all-time high of $252,800 in May, according to the most recent National Association of Realtors® report.
The majority of new-home sales were in the South, where the lower cost of taxes and living makes it appealing for both businesses and transplants. About 360,000 newly constructed homes were purchased in the region, up 6.2% from April and 15% from May 2016.
The West, home to Silicon Valley, had the second-most new-home sales, at 162,000. That was a 13.3% rise from April and a 14.1% bump from the same month a year earlier.
Meanwhile, the number of new-home sales dropped in the Midwest and the Northeast. In the Midwest, they plummeted to 55,000—down 25.7% from April and falling 23.6% from the previous May. This is the lowest they’ve been all year.
In the Northeast, sales also fell 10.8% from April and remained the same, at 33,000, as May 2016.
The post New Homes Just Keep Getting Pricier, but Buyers Keep Coming appeared first on Real Estate News & Insights | realtor.com®.