Though the National Association of Realtors (NAR) reported that sales of brand-new homes are expected to jump 10.7 percent from 560,000 in 2016 to 620,000 this year, the U.S. Census Bureau and the U.S. Department of Housing and Urban Development jointly announced Monday that new residential sales for April were down 11.4 percent from the revised March rate of 642,000. This puts the seasonally adjusted annual rate at 569,000.
“[This is] bad news, especially for first-time and lower income buyers,” said Realtor.com Senior economist Joseph Kirchner, Ph.D. “This month’s drop in home sales and the stagnation in new home inventory will continue to exacerbate the national inventory shortage which will result in even higher prices and lower affordability.”
The median sales price of new houses sold in April 2017 was $309,200, the average sitting at $368,300. More often than not, new homes are more expensive. Builders have to handle shortages of land and labor on top of rising costs of materials and difficulty getting financed. According to NAR, the price tag is likely to continue rising. They predict prices will jump 5 percent in 2017 and an additional 3.5 percent in 2018.
“A short supply of new homes means more competition and higher prices for everything else,” Kirchner said. “Buyers will have even more difficulty finding a suitable home to purchase–and they’ve been having enough trouble as it is.”
According to Kirchner, a decrease in production of lower priced homes will exacerbate the persistent trend away from the sale of affordable homes.
“The percentage of new homes under $200,000 since November has dropped by about a third since the previous two years,” Kirchner said. “Builders are focusing on the mid to upper price ranges, which is reflected in the lack of affordable new homes on the market. Without more affordable options, millennials and other first-time buyers will continue to face challenges getting into their first homes.”
The May report is scheduled to release June 23, 2017. You can see details on the April report here.