In a new report that looks at the premiums homebuyers are paying for new homes, Trulia found that new homes sell for about 1.3 times more than already existing homes and are 50 percent larger, but have 8 percent smaller lot sizes than existing homes.
“Nationally, a new home costs 28 percent more than the rest of the housing stock. However, when examining individual markets, a pattern emerges: the older the metro, the more expensive the metros are” said Alexandra Lee, Housing Data Analyst for Trulia’s Housing Economics Research Team.
Trulia looked at new home listings over a period of five years to see what homebuyers are paying for and of the 28 percent premium, roughly half is tied to a home’s features, such as new amenities and less maintenance.
Detroit-Dearborn-Livonia had the largest difference in price of newly built homes compared to older ones; you’ll pay 3.2 times more for a new home. New homes are also 86 percent larger in lot size and have 94 percent more square feet. Trulia points out that metros in the West and South have the lowest price differences in new homes.
For example, Charleston-North Charleston, South Carolina lists only 6 percent more than older homes and lot sizes have 30 percent less square feet. This is followed by Tacoma-Lakewood, Washington with a 10 percent increase. Portland-Vancouver-Hillsboro, Oregon, and Oakland-Hayward-Berkeley, California come next, both having a 14 percent increase compared to old homes.
New home sales have experienced a sharp increase, according to Trulia’s New Home Sales report for September also released Wednesday, which Trulia believes may have stemmed “from a three-month-skid.” According to Trulia, sales increased to a seasonally adjusted rate of 667,000, up 18.9 percent month-over-month and 17 percent-over-year.
“With the month’s supply of new homes dropping to tie the lowest level in a year, it suggests the signs of a slowdown in new home sales over the past few months were actually false positives,” said Ralph McLaughlin, Trulia’s Chief Economist. It also appears home sales increased sharply in the South, implying that the series of recent hurricanes did not have much impact on the demand for new homes.
To see Trulia’s full methodology on new home premiums, click here.