Old houses now cost as much as new houses
Here's a remarkable little snapshot of the state of U.S. home prices.
Driving the news: New data shows the median price for an existing single-family home — as opposed to a newly built one — stood at $416,000 in June.
- That's basically the same price that a newly built house was selling for in May, the last month we have data for. (June numbers are out next week.)
Yes, but: It's true, we're kind of comparing apples to oranges, since we don't have the new home sale price for June yet. But the sharp decline of the premium for new homes in this year is pretty remarkable, nonetheless.
Context: For the last 10 years, prices for new single family homes have been on average about $60,000 more than existing home sales. In May, that differential was less than $15,000.
The bottom line: The surge of mortgage rates over the last year — they're hovering just below 7% — continues to upend the housing market in surprising ways.
- The rate "lock-in" effect has resulted in a dwindling supply of existing homes on the market, helping to keep those prices elevated.
- Meanwhile, home builders are offering smaller, more affordable houses to tap into demand from first-time buyers facing low inventories of existing homes.
- As a result, the price points between this old house, and that new one, are starting to converge.