In the current spring housing market, there’s a shortage of homes, prices are high, and interest rates are rising. Because of this, people who want to buy homes are looking more at newly built houses.
Nicole Bachaud, a senior economist at Zillow Group, said, “New construction offers more opportunities.”
In March, about 693,000 new single-family homes were sold, which is 8.3% higher than last year, according to the U.S. Census Bureau and the U.S. Department of Housing and Urban Development. These homes had a median sales price of $430,700.
On the other hand, sales of previously owned homes decreased by 3.7% from March 2023, as reported by the National Association of Realtors.
Meanwhile, buyers are turning to builders because they’re usually more flexible with pricing. Builders give buyers incentives like lowering interest rates and reducing prices. They may even cover closing costs, according to experts.
Matthew Walsh, an assistant director and economist at Moody’s Analytics, said, “This has been encouraging some potential buyers to consider the new home sales market.”
The Price Difference Between New Builds and Existing Homes Is Getting Smaller
While new homes used to be sold for a bit more than existing ones, the difference has gone down a lot since the fall.
“Prices are much closer now than they’ve been in the last thirty years,” said Walsh.
In the last six months, the median price for a new home is only about 4% higher than the median price for an existing one. This is much lower than before the pandemic when new homes were over 40% more expensive than existing ones, Walsh explained.
“On the existing side, there’s a very limited supply for sale,” he said. “But with new homes, builders are focusing more on selling lots of houses rather than making big profits.”
In the past, people who were careful with their money and had smaller budgets had to stick to the existing home market. Now, those who are still looking might find more choices in the new home sales market.
