The US housing market is showing some worrying signs, with new homes now selling for $3.50 LESS per square foot than existing ones—a gap not seen since 2005.
Here's what you need to know:
🔸 Price Disparity: The median price per square foot of an existing home is now $213.20, while new homes are at $209.70. This means older homes are now more expensive per square foot than new ones—a highly unusual situation.
🔸 Skyrocketing Prices: Over the past 6 years, the median price of existing homes has surged by 70%, compared to a 50% increase for new homes. This disparity reflects an overheated market, driven by limited supply and high demand.
🔸 Price Cuts from Builders: Homebuilders are offering more price cuts than homeowners, who are locked into their low-rate mortgages. This trend is further contributing to the pricing gap between new and existing homes.
🔸 Mortgage Rates: The average interest rate for outstanding mortgages is around 4% in most states, despite current rates hovering at 6.5%. This significant difference is keeping many homeowners from selling, as they are reluctant to lose their favorable mortgage terms.
When older homes become more expensive than new ones, it's a clear sign that something is wrong in the market. The combination of rising prices, interest rate disparities, and strategic price cuts by builders suggests a market that's not functioning optimally.