Many people across the country are choosing to remodel and create additions to their current homes instead of searching for a home to trade up to. Whether this is because they are still a bit gun-shy from the housing crisis, they are undervaluing their homes and, thus, are reluctant to sell, or if they just like their current neighborhood and do not want to move, all that matters is that for whatever reason, there will be fewer existing homes for sale on the market.
With demand so high and inventory, especially for existing homes, so low, that means builders can step in and fill the gap with new construction, realtor.com reports. Which is what they have been doing, as evidenced by the 61,000 new homes that were sold in April, a number not seen since June 2007. This was a 27 percent increase year-over-year and a 22 percent increase from March. Further evidence that new home sales, and not existing homes, are driving the market is the fact that 70.5 percent of April buyers closed on homes that had not yet been completed.
These newly constructed homes come at a cost, however, as the median value of a new home rose to $321,100 in April, which was a 9.7 percent year-over-year increase and a 7.8 percent jump from March.
The majority of homes sold were in the trade up market and cost between $200,000 and $300,000. The number of entry-level homes, those existing between $150,000 and $199,000 saw a pretty hefty increase of 42.9 percent, as well, which is good news for the plethora of entry level homebuyers who have been unable to find a home they could afford recently.
The South saw the majority of new home sales followed by the West, Midwest, and Northeast.