New Homes Are Outside Of The First-Time Buyer’s Price Range

While January was a positive month for new home sales, experts could only imagine what the figures would look like if first-time buyers could afford new homes.

Realtor.com reports that the median new home sold in January was priced at $312,900, well above the median $228,900 price for existing homes. More than half the homes sold last month cost more than $300,000, which priced out first-time buyers. Only 5 percent were under $150,000 and 9 percent were between $150,000 and $199,999.

New residences cost more because they’re expensive to build, with increased local red tape, high land and material costs, and a shortage of construction workers. So builders are going to erect only what they’re sure they can sell, says Jonathan Smoke, the chief economist of Realtor.com. “It effectively limits who can buy the new homes and how many new homes can be built and sold,” Smoke says.

Read more