While Home Sales Surged, Entry Level Sputtered
Another take on the surge of new-home sales during August is that the entry-level product became more expensive.
The buying was all in the mid to luxury sectors. Just 10% of sales were for homes below $200,000, which used to be considered the entry level for the builders. The biggest gain in sales was at the highest end. The number of homes priced above $750,000 was up about 60% annually.
“Entry level has been redefined,” said Raymond James homebuilding analyst Buck Horne. “To the extent that entry level used to be $200,000, the realistic number is more like $300,000 is the new entry level.”
Surging demand in August caused a sharp drop in the supply of newly built homes for sale. In the top 25 homebuilding markets, supply went negative for the first time this year, declining 3.7% annually. The drop from July to August was especially dramatic. This as the supply of existing homes for sale also fell, according to the National Association of Realtors.