People want homes that cost less, and builders are giving them what they want

There are two main things that make it hard for buyers to afford homes in today’s market: mortgage rates that are higher than they have been in the past couple of years and rising home prices caused by a lack of homes for sale. To deal with these problems, a lot of people are working with their real estate agents to find homes that cost less. And because there are a lot of newly built houses on the market right now, this search often includes brand new homes.

Looking straight down on beautiful suburban homes, Springtime aerial view.

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Less money is being spent on newly built homes.

Using the most recent data from the Census, the graph below shows that in June, more recently built homes were sold at lower prices than in 2022:

Only 58% of recently built homes sold for less than $500,000 last year. This number went up to 65% in June. This means that more people are getting newly built homes right now, even though they are still hard to afford.

Builders are offering options that cost less.

Builders have noticed this trend and are making changes based on it. Chief Economist at Keeping Current Matters, George Ratiu, says:

“Builders are also reacting to this change by making homes a little bit smaller in order to meet lower price points…”

This trend is confirmed by new data from the Census, which shows that the median sales price of recently built homes has gone down in recent months (see graph below):

Mikaela Arroyo, who is in charge of the New Home Trends Institute at John Burns Real Estate Consulting, says that the builders who are most in tune with this trend are making ways for people to become homeowners: “It is making it possible for people to be able to afford an entry-level home in an area. If you get that size down, that automatically makes it a more affordable home.” Most likely, the builders who are reducing size the most are trying to make their products more cheap.

What a broker can do to help

Builders who make new homes that are smaller and less expensive give you more affordable choices at a time when you really need them. If you want to buy a home soon, work with a real estate agent in your area to find out what’s for sale. An agent can help you look at nearby houses that are new or are being built.

In conclusion

Talk to a real estate agent if you’re having trouble finding a home you like in your price range. You need an agent who knows everything there is to know about the new homes in your area, including ones that are still being built or have just been finished. So, you’ll have an expert on your side who can help you with the home-buying process by telling you about builders’ names, contracts, and negotiations, among other things.