Economists' Outlook

Housing stats and analysis from NAR's research experts.

The Latest on New Home Sales

  • Contract signings for newly built homes bounced back in April after suffering two consecutive months of decline. A total of 443,000 new homes went under contract in the past month, an increase of 6 percent.
  • New home sales (which are only contract signing and not closings) represent a small share of the total housing market.  Currently, the existing home sales market covers over 90 percent of all sales.  It was reported that existing home sales (closings) also rose in April.
  • The inventory of newly built homes has been slowly rising.  Still, the inventory conditions are at historic lows.  Whatever the homebuilders build, it is being sold quite quickly.  It took on average 3.4 months to sell a newly built home.  A few years ago, it took over 10 months.  This sounds like a clear signal for homebuilders to produce more homes.
  • The median price of a new home in April was $275,800.  Though a slight decline, the newly built home is currently carrying a hefty premium over the existing home price.  Since new home prices must cover the cost of construction there is a little room for a price decline.  That means existing home prices are a better bargain compared to new home prices by historical standards.
  • Unlike automobiles where some consumers will only consider a new car without the old smell, Americans understand the unique value of location, location, location that existing homes are currently situated.  That is why far more existing homes are sold compared to new in America.  By contrast, in Japan, where people are obsessed with cleanliness (hot cleansing towels before every meal, for example), newly built homes with no history of past owners are preferred.  Perhaps related to cleanliness and probably not to newly built homes, the Japanese have the highest life expectancy in the world.

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