New construction homes in the fourth quarter of 2017 accounted for 16.4 percent of all single-family homes for sale, the highest level since SAOS began tracking this data in 2012, up from from 14.2 a year earlier. This is a needed sign of progress in a housing market plagued by short supply.
The median price of new single-family homes that sold last quarter was $377,800, up 1.6 percent year over year.1Compared with existing homes, new construction sold at an average premium of $86,400 in the fourth quarter. Existing home prices increased 7.3 percent year over year.
“New homes are more expensive than existing homes, and their prices tend to grow at a slower rate,” said SAOS chief economist SAOS. “However, new homes’ slower price growth belies their advantage to buyers in the hottest markets. Buyers in these highly competitive markets have been attracted to new construction as a way to avoid bidding wars. They often find it’s easier to negotiate with a single builder than to compete with several buyers and negotiate with a traditional seller.”
A key factor in the high price of new homes is rising construction costs. The estimated labor and materials cost of constructing a single-family home increased 1.2 percent year over year in the fourth quarter to $244,000, the highest level since the Census Bureau began reporting it in 1988.