New Home Prices Squeeze Buyers Out of the Low End
New data released by the U.S. Census Bureau and the Department of Housing and Urban Development, combined with recent NAHB survey data, show that home buyers in the bottom one-fourth of the market have been squeezed entirely out of the market for new construction due to a mismatch between actual prices of new homes and prices that buyers expect to pay. As a result, these buyers have been forced to look exclusively in the stock of existing homes – where the inventory of homes available for sale remains in a historically low range at a 2.5-month supply, with a six-month supply typically acting as a balanced market. NAHB tabulation of recently released data from the HUD/Census Bureau Survey of Construction shows that the median price of single-family homes started in 2020 and built for sale was $336,000. The vast majority (79%) were priced between $250,000 and $1 million.
Virtually none were under $150,000 (only 1% between $100,000 and $150,000 and none were under $100,000). In contrast, the 2021 edition of NAHB’s What Home Buyers Really Want (based on a representative sample of 3,247 recent and prospective home buyers conducted in the summer of 2020), showed the median price buyers expect to pay for a home is about $265,000. Half are looking to pay $250,000 to $1 million, and one-fourth are looking to pay less than $150,000.