People Want Less Expensive Homes – And Builders Are Responding
In today's housing market, buyers face two major affordability challenges: mortgage rates that are higher than they have been in recent years, and rising property prices due by insufficient availability. Many people are working with their real estate brokers to discover less expensive homes in order to overcome these obstacles. And, with newly built homes accounting for a historically high proportion of total available inventory today, that search frequently includes brand new homes.
People are spending less on newly constructed homes.
The graph below uses the most recent Census data to illustrate that in June, more newly built home sales in the United States were in lower price categories than in 2022:
Last year, just 58% of newly built home sales were less than $500,000. In June, that figure had risen to 65%. This means that more individuals are purchasing less expensive newly built homes right now, despite the fact that affordability remains a concern.
Builders are providing more affordable options.
Builders have noticed this trend and are responding accordingly. According to George Ratiu, Chief Economist at Keeping Current Matters:
“Builders are also responding to this shift by bringing slightly smaller homes to market in an effort to meet lower price points . . .”
New Census data confirms this pattern, showing that the median sales price of newly built homes has fallen in recent months (see graph below):
And, as Mikaela Arroyo, Director of the New Home Trends Institute at John Burns Real Estate Consulting, points out, the builders who are most responsive to this trend are creating 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 Assist
Builders who produce smaller, less expensive newly built houses provide you with more economical options at a time when they are desperately required. If you want to buy a house soon, work with a local real estate agent to see what's available in your neighborhood. An agent can assist you in looking at recently built or under construction homes in the area.
Let's talk if you're having trouble locating a property you like within your price range. You need a real estate professional that is up to date on the current inventory in our area, including houses that are still under construction or have recently been built. That way, you'll have an expert on your side who can advise you on builder reputations, contracts and negotiations, and other aspects of the homebuying process.