Two sets of data, one from the U.S. Census Bureau, the other from the National Association of Home Builders, underscore the disparity between new home prices and what buyers expect to pay.
2018 Census Bureau figures show that the median sales price of single-family homes that year was under $322,000. Seventy-three percent of those units were priced between $250,000 and $1 million, 3% were under $150,000 and none were priced under $100,000. In contrast, NAHB results from a 2018 survey of 4,000 recent and prospective buyers revealed that they median price they expected to pay was $254,000. Less than half expect to pay between $250,000 to $1 million; 27% were looking to pay less than $150,000, and 12% wanted to pay less than $100,000.
The reasons for this mismatch at the low end are not mysterious. Factors such as the ongoing shortages of labor and lots, and escalating regulatory costs have made it difficult to impossible to produce a new home at these lower price ranges. This obviously is forcing a significant share of buyers into the market for existing homes only. However, the market for existing homes has been very tight recently. The months’ supply of existing homes reported by the National Association of Realtors has been consistently under 4.5 for over two years.