In today's housing market, buyers confront two significant affordability challenges: higher-than-average mortgage rates and rising home prices due to inadequate supply. In order to overcome these difficulties, many consumers are working with their real estate brokers to find less priced properties. And, because newly built homes make up a historically high share of total available inventory today, that search typically includes brand new homes.
People Are Spending Less on Newly Built Homes
The graph below uses the latest information from the Census to show, in June, more of the newly built home sales in this country were in lower price ranges than in 2022:
Last year, only 58% of newly built home sales were less than $500,000. This June, that number was up to 65%. This means more people are buying less expensive newly built homes right now while affordability remains a challenge.
Builders Are Offering Lower-Cost Options
Builders have picked up on this trend and are reacting accordingly. George Ratiu, Chief Economist at Keeping Current Matters, explains:
“Builders are also responding to this shift by bringing slightly smaller homes to market in an effort to meet lower price points.”
New data from the Census further confirms this pattern – it shows the median sales price of newly built homes has dipped down in recent months (see graph below):
And as Mikaela Arroyo, Director of the New Home Trends Institute at John Burns Real Estate Consulting, says, the builders who are most responsive to this trend are forming pathways to homeownership:
“it is creating opportunities for people to be able to afford an entry-level home in an area, if you get that size down, that automatically will make it a more affordable home. The [builders] that are decreasing [size] the most are probably the ones that try to build more of an affordable product.”
How an Agent Can Help
Builders who build smaller, less expensive houses provide you with more affordable options at a time when they are sorely needed. If you're looking to buy a home soon, consult with a local real estate agent to learn what's available in your area. A real estate agent can help you look at freshly built or under construction homes in the region.
Bottom Line
Let's discuss if you're having problems finding a suitable house within your budget range. You need a real estate expert who is current on our area's inventory, including houses that are still under construction or have recently been built. You'll have a professional on your side who can advise you on builder reputations, contracts and negotiations, and other parts of the homebuying process.
