For the first time in over 15 years, existing homes are more expensive than newly constructed ones, a trend first reported by Bloomberg. That's 2005, just a few years before the big housing bubble, for those counting,
"Consumers are facing much higher home prices, rising mortgage rates, and falling affordability. However, buyers are still active in the market," says Lawrence Yun, chief economist at the National Association of Realtors. "The sales for March would have been measurably higher, had there been more inventory.” Yun says that multiple offers are common and buyer confidence is rising.
NAR published that the median price of pre-owned, single-family homes rose to $334,500, up over 18% from 2020. All regions posted double-digit price gains. Yet low inventory meant that the overall sales of existing homes dipped for March as buyers scrambled to find a property to buy. Meanwhile, the median price of a new home range is $330,800, according to the National Association of Home Builders. On average, that means that a family in some parts of the country could purchase a newly constructed home cheaper than a pre-owned–if they can find one.
Falling inventory pushes existing home prices higher
NAHB reports that the inventory of newly built, single-family homes fell to a 3.6-months’ supply, 44.6% lower than March of 2020.
“Our members are seeing strong buyer traffic as continued low mortgage rates are helping fuel sales,” says NAHB Chairman Chuck Fowke. “However, builders still grappling with major supply chain issues and soaring materials costs, which are causing construction delays and preventing them from adding to the already very low inventory.”
Existing single-family homes aren’t easy to find, either, down over 28% from last year. Homes are flying off the shelf, selling at an average of just 18 days, a record low, according to NAR.
If the rising prices of pre-owned homes continue long-term, it may put pressure on the remodeling industry as homeowners who cashed out to afford a pre-owned home have less to spend down the line.