Based on recent data, existing homes look more expensive than new construction. Are they?
According to data reported by NAR, the median price that existing housing stock sold for in March was actually higher than the median price of a new construction home in the same month ($334,500 vs. $330,800 respectively). As they explain, this does not, in fact, mean that new homes are less expensive than existing ones.
How Does This Happen?
NAR goes on to explain that while these numbers seem counterintuitive, they simply reflect the fact that builders are focusing on supplying affordable housing stock and that existing housing for sale right now is disproportionately in higher price tiers.
When looking at price per square foot, they say, after controlling for other market factors, new homes are still more expensive per square foot than existing homes.
What Is Driving It?
In their reporting, NAR states that changing market realities due to inventory shortages seem to be driving this trend.
First-time home buyers are making up an increasing proportion of new construction home purchases, so builders are constructing more affordable homes to supply the demand for them. They go on to say that though both new and existing home prices are increasing steadily, buyer activity shows no sign of slowing.
