At some point the price is just too high. That may be increasingly the case for potential buyers of newly built single-family homes.
Sales of those homes in November came in well below analysts expectations, down 14% from a year ago. And October’s sales numbers were revised to the lowest level since the start of the pandemic, according to the U.S. Census Bureau count.
Despite slowing sales and rising mortgage rates, the median price of newly built homes sold in November rose nearly 19% from November 2020. This came even as the supply of new homes rose. That rising inventory should push prices down, observers say. However, with inventory in existing homes historically low, prices in newly built homes are continuing to jump. The question for now is, how high is too high?
“A hefty correction appears to be due, but the rapid increases in existing home prices — inventory in that market is only one-third the level in the new home market, relative to sales — is putting extra upward pressure on new home prices,” wrote Ian Shepherdson, chief economist at Pantheon Macroeconomics in a note to investors.
Prices for existing homes sold in November were up just over 13% year over year, a slight increase from the annual gain in October, according to the National Association of Realtors.