The dream of many would-be buyers is a new home, but it makes less and less financial sense in many places.
A wave of foreclosures has driven down the cost of previously occupied homes and made them even more of a comparative bargain. By contrast, new homes have become more expensive.
The median price of a new home in the United States is 48 percent higher than that of a home being resold, more than three times the gap in a healthy housing market. Such a disparity can be a drag on the economy.
New homes represent a small fraction of sales, but they cause economic ripples, bringing business to construction and other industries. Sluggish new-home sales deprive the economy of strength. The gap is widening because prices of previously occupied homes are falling fast, pulled down by waves of foreclosures and short sales.
The median price of a new home has risen almost 6 percent in the past year to $230,600, even though last year was the worst for sales in nearly a half-century. Slowed by those higher prices, new-home sales have plummeted over the past year to the lowest level since records began being kept in 1963. By contrast, sales of previously occupied homes have fallen almost 3 percent in the past year. Prices have dropped more than 5 percent. In February, the median price for a resale was $156,100, according to the National Association of Realtors. That adds up to a price difference of $74,500, or 48 percent, the highest markup in at least a decade. In healthier markets, a new home typically runs about 15 percent more, according to government data.
In some areas, older homes were more expensive before the housing market bust. That was especially true in urban neighborhoods with little or no room left to build on. But now, buyers get their pick even in some of the trendiest places.
Homebuilders have taken notice. Residential construction has all but come to a halt. Builders broke ground in February on the fewest homes in nearly two years. Building permits, a gauge of future construction, sank to their lowest in more than 50 years. Many builders are waiting for new home sales to pick up and for the glut of foreclosures and other distressed properties to be reduced, but with 3 million foreclosures forecast this year nationwide, some analysts do not expect a turnaround for at least three years.