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.
“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.
Courtesy of realtor.com and credit to Clare
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