by CalculatedRisk on 11/28/2011
As part of the new home sales report, the Census Bureau reported that the average price for new homes fell to the lowest level since September 2003.
From the Census Bureau: “The median sales price of new houses sold in October 2011 was $212,300; the average sales price was $242,300.”
The following graph shows the median and average new home prices. The average new home price is at the lowest level since August 2003.
This makes sense – to compete with all the distressed sales, the builders have had to build smaller and less expensive homes.
The second graph shows the percent of new home sales by price. At the peak of the housing bubble, almost 40% of new homes were sold for more than $300K – and over 20% were sold for over $400K. In October, only 20% were sold for more than $300K – and only 8% for over $400K.
The third graph shows existing home sales (left axis) and new home sales (right axis) through October.
This graph starts in 1994, but the relationship has been fairly steady back to the ’60s. Then along came the housing bubble and bust, and the “distressing gap” appeared due mostly to distressed sales.
I expect this gap to close over the next few years once the number of distressed sales starts to decline.
Note: The National Association of Realtors (NAR) is working on a benchmark revision for existing home sales numbers and I expect significant downward revisions to sales estimates for the last few years – perhaps as much as 10% to 15% for 2011. Even with these revisions, most of the “distressing gap” will remain.
- Slightly Improvement in New Home Sales (eyeonhousing.wordpress.com)
- Behind the Numbers: Making Sense of New Home Sales (blogs.wsj.com)