August 18, 2023
Today’s housing market presents two main affordability challenges impacting buyers: (1) Substantially higher mortgage rates than in recent years; and (2) Rising home prices caused by low inventory. To overcome those obstacles, many purchasers, together with their agents, are striving to find less expensive homes. Because newly-built homes historically comprise a large percentage of the total available inventory today, that search often includes brand new homes.
People Are Spending Less on Newly Built Homes
The graph below uses the latest information from the Census to illustrate that in June, more of the newly-built home sales in this country were in lower price ranges as compared to sales in 2022:
Last year, only 58% of newly built home sales were less than $500,000. This June, that number was up to 65%. This means that more people are buying less expensive newly-built homes right now while affordability yet remains a challenge.
Builders Are Offering Lower-Cost Options
Builders have picked up on this trend and are reacting accordingly. George Ratiu, Chief Economist at Keeping Current Matters, explains:
“Builders are also responding to this shift by bringing slightly smaller homes to market in an effort to meet lower price points . . .”
New data from the Census further confirms this pattern showing that the median sales price of newly-built homes has dropped in recent months (see graph below):
As Mikaela Arroyo, Director of the New Home Trends Institute at John Burns Real Estate Consulting, says, the builders who are most responsive to this trend are providing inroads and forming pathways to homeownership:
“. . . it is creating opportunities for people to be able to afford an entry-level home in an area. . . . if you get that size down, that automatically will make it a more affordable home. The [builders] that are decreasing [size] the most are probably the ones that try to build more of an affordable product.”
How an Agent Can Help
Builders producing smaller, less expensive newly-built homes today, provide affordable options at a time when that’s really needed. So, if you’re hoping to buy a home soon, it’s best to partner with a top notch local real estate agent to find out what’s available in the area(s) of interest to you. An agent can help identify available existing homes, newly built homes or ones under and proposed for construction nearby.
Bottom Line
If finding the right home for your needs and budget has been frustrating and illusive, let’s connect to review your situation. Remember a real estate professional will typically know the latest inventory in your area, including homes still under construction or those just built. Having an expert on your side who can provide information on builder reputations, builder contracts and negotiations, will undoubtedly help you with the homebuying process.