According to the National Mortgage News, new home prices may be a better deal than existing homes.
The average new home in the U.S. went for $324,467 in June, 28% more than the $254,200 price for existing homes, according to data from John Burns Real Estate Consulting. That’s down from a 37% gap in 2015 and is the smallest difference since the end of 2010.
The main reason is that existing-home prices are rising faster. Home buyers are in an affordability crunch, especially in the pricey coastal markets, as they compete for a dwindling supply of listings. And while builders have been slow to boost production, citing higher costs for land, labor and materials, they’ve started marketing smaller houses with fewer frills, farther from job centers, to budget-conscious first-time buyers.
New homes typically sell at a premium because they have modern designs and are more energy-efficient, among other reasons.
The price gap between new and existing homes was much narrower during last decade’s housing bubble, when existing-home values were inflated by risky lending standards and rampant speculation. The highly competitive market for previously owned homes is starting to cool, particularly in hot markets like Denver, Seattle and Austin, Texas, where incomes haven’t kept pace with price gains and rising mortgage rates.
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