Investopedia
No matter what data you examine, the housing market is in a rut. Prices are up, sales are down and fewer people can afford the dream of home ownership.
But for homebuyers, there are two different housing markets. Buyers can look for newly constructed homes, which are more plentiful but often smaller. Or, they can hunt for their ideal home from the limited properties in the existing home market.
As home prices continue to rise, homebuilders are constructing smaller homes to meet consumer demand. Census Bureau data showed that the median size of a new home is down 12% from its 2015 peak.
"There is a divergence between the two markets in the current cycle, which is fairly rare," said Lawrence Yun, chief economist at the National Association of REALTORS® (NAR). "Usually, new home sales and existing home sales move together."
Existing home sales fell for the third straight month in April, NAR data showed, dropping 0.5% from the prior month and down 2% from the same point last year. At a seasonally adjusted rate of 4.0 million, April's existing home sales volume was the lowest since September.
Meanwhile, new home sales are ticking higher. In April, new homes sold at a seasonally adjusted annual rate of 743,000, up more than 10% from the prior month.
In the current market, builders have a key advantage over real estate agents: inventory.
"We don't have so much inventory of existing homes. For new homes, builders can simply build [more,]" Yun said. "So the builders have inventory, REALTORS® don't. Consequently, new home sales are rising, while existing home sales still are at cyclical low points."