Everybody wants a new home, but fewer people will be able to afford them at this rate.
Newly built single-family homes are extremely expensive.
That was the big takeaway from the latest new home sales report from the Census Bureau, which found that the median and average sales prices of new homes in October was $305,000 and $401,100, respectively.
Those numbers, suffice to say, represent an enormous jump. How enormous? Here are three stats to consider:
- Since Oct. 2013, median and average sales prices for new homes have jumped 15.4 and 19.5 percent, respectively.
- Since Oct. 2010, they have jumped respective amounts of 49.4 and 57.7 percent.
- For comparison’s sake, that four-year jump is an even greater increase than what we saw during the housing boom years; from Oct. 2000 to Oct. 2004, median and average prices increased 30 and 34.6 percent, respectively.
Here is a graph showing how much prices have increased since 1994, courtesy of some digging we did through Census Bureau data:
In case you’re wondering, median and average sales prices since 1994 are up 131 and 162 percent, respectively.
Of course, there were other details in the Census Bureau’s report (sales of new homes were up 0.7 percent from September to October and 1.8 percent from Oct. 2013) but the extraordinary increase in sales price is the defining stat right now for new construction, and it all has one focal cause – inequality.
As we’ve extensively detailed in the past, new construction has shifted towards affluence in a major way, and that shift is simply because homebuilders are following the marketplace. The economy remains a precarious place for many Americans, so builders are focusing their business on a safer bet – aka, more affluent consumers.