Half of newly constructed homes are now selling for more than $400,000, a share of the market that has risen rapidly during the pandemic.
Nearly 5 in 10 new single-family builds that sold in July exceeded a $400,000 price point, up from 3 in 10 a year ago, according to records from the U.S. Census Bureau.
These latest figures paint a broad picture of a home construction market that has been unable to sustain its heightened sales numbers from the earlier months of the pandemic.
As the cost of material goods shot up and fluctuated unpredictably in the months since, new builds were even less likely to sell on the more affordable end of the price spectrum, the data shows.
“[While] demographic-based demand remains solid, lack of entry-level supply remains a challenge for the market,” the National Association of Home Builders said in a recent report.
First-time buyers looking for newly built houses at traditional starter-home prices have found themselves almost entirely priced out. Even last year, as few as 8 percent of new builds sold for under $200,000. But now, only 1 percent of new builds sell for less than that mark.
Sales of newly built homes rose 1 percent from June to July on a seasonally adjusted basis but remained down 27 percent year over year.
After accounting for normal seasonal patterns, the number of new builds that sold in July was similar to the levels tracked in November 2019, before the pandemic began.
Since then, demand for homes shot up and fueled record price growth throughout the market.
During the first full month of coronavirus-related lockdowns nationwide, builders braced for the worst as buyers backed out of deals, leading sales to fall to an annual rate of 582,000. This was down 23 percent from a recent high the industry had posted in January of that year.
But builders quickly rebounded amid swelling demand for new homes during the pandemic. By July 2020, homes were being sold at a rate of 972,000.
Although fewer new homes actually sold year over year in July 2021, the number of new homes for sale was up substantially.
The number of unstarted builds for sale rose from 58,000 in July 2020 to 104,000 at the end of July 2021. The number of for-sale homes under construction also jumped from 177,000 to 230,000 over that same period. The number of newly completed homes for sale declined, however, dipping from 55,000 to 34,000.
