New homes in the U.S. have traditionally always been more expensive than existing homes, but recent data suggests that the opposite is now true.
According to the National Association of Realtors, in March the median price of an existing single-family home hit a record high of $334,500. Also that month, the U.S. Census Bureau released data showing the median sales price of a newly built home was $330,800, below that of existing homes.
CNBC reported that this was the first time existing homes have sold for more than newly built homes in over 15 years.
But economists say that the situation isn’t as clear cut as the data suggests and that buyers won’t necessarily pay more for an older home than a new one.
Robert Dietz, chief economist of the National Association of Home Builders, told CNBC that when we look at homes on the basis of square-footage, “within comparable markets a new home is still priced higher than an existing home.” So it’s more about the size of the home than anything else.
Others say that the limited inventory of existing homes for sale is one of the main factors that have made the median price rise above that of newer homes. In March, the number of existing homes that sold for between $100,000 and $250,000 fell by 10% compared to the same month one year ago. On the other hand, sales of existing homes priced at $750,000 to $1 million jumped by 82% during the same period, according to data from the NAR.
At the same time, some builders are producing more lower-priced homes aimed at first-time buyers to meet the growing demand from that demographic. First-time buyers snapped up 43% of all newly built homes in February, according to NAHB data, whereas first-times only purchased 31% for existing homes.
Whatever the cost of a new home or an older home is, buyers remain undeterred, economists say.
“Consumers are facing much higher home prices, rising mortgage rates, and falling affordability,” said NAR Chief Economist Lawrence Yun. “However, buyers are still actively in the market.”