People Want More Affordable 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 to 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 Built Homes
The graph below uses the latest information from the Census to show, in June, more of the newly built home sales in this country were in lower price ranges than in 2022:Last year, only 58% of newly built home sales were less than $500,000. This June, that number was up to 65%. This means more people are buying less expensive newly built homes right now while affordability remains a challenge.
Builders Are Offering Lower-Cost Options
Builders have picked up on this trend and are reacting accordingly. George Ratiu, Chief Economist at Keeping Current Matters, explains:
“Builders are also responding to this shift by bringing slightly smaller homes to market in an effort to meet lower price points . . .”
New data from the Census further confirms this pattern – it shows the median sales price of newly built homes has dipped down in recent months (see graph below):And as Mikaela Arroyo, Director of the New Home Trends Institute at John Burns Real Estate Consulting, says, the builders who are most responsive to this trend are forming 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 Help
Builders who produce smaller, less expensive newly built houses provide you with more economical options at a time when they are desperately needed. 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.