Newly built homes are more expensive than they've ever been before. They are also more expensive when compared to similar existing homes than they've ever been before. And that is why sales are suffering, dropping an unexpected 9.4 percent in July compared to June, according to the U.S. Census.
They are simply out of reach for too many potential buyers.
You don't have to do a lot of math to see it. The median sale price of a newly built home in July jumped more than 6 percent compared to July 2016, to $313,700. That marks the highest July price ever. Last December, the median price hit the highest of any month on record.
In addition, the price premium for newly built homes compared to comparable existing homes has more than doubled since 2011, according to John Burns Real Estate Consulting.
"Long term, the new home median price has been mostly 10 percent to 20 percent above the existing home median since 1990. Since 2011, however, new home prices have been at a 35 percent to 40 percent premium over resale prices," John Burns wrote in a recent note to clients. "While the exact percentages aren't perfect due to 'apples and oranges' comparisons, our consultants have been confirming for years that new home sales have been slowed by larger than usual new home premiums."