Since the mid-1980s, new homes have often outpaced existing homes, Howard Hughes Holdings CEO David O’Reilly told CNBC on Wednesday, adding that it has been slowing for the past few months. Now it’s gone.
“Today’s result has turned that on its head,” he said.
In the month of May, the median sales price of a new home fell 0.9% from a year ago to $417,400, the Commerce Department said Wednesday.
In contrast, the median sales price of an existing home jumped 5.8% from a year ago to a new record of $419,300 in May, the National Association of Realtors said earlier this month. NAR said that reflects more sales of high-priced properties and more discounts.
That’s as the housing market lockout has kept the supply of existing homes tight because homeowners with low mortgage rates are unwilling to give up and sell. But demand remains high, adding upward pressure on prices.
Meanwhile, the latest quarterly reports from homebuilders showed average sales prices were falling, O’Reilly said, citing a shift in product mix.
“That shows that the buyer is adapting to a smaller home, taking up less space and trying to get back into that affordability range,” he said.
O’Reilly, head of his own real estate development and management firm that works with builders, has been bullish on the industry, declaring in April that this is “the golden age of home building.”
The shift in home prices for new homes versus existing homes also comes as the $200,000 first home will disappear, making it harder for first-time buyers to enter the housing market.
“In the past few years, the number of homes under $200,000 has gone from nearly half of all sales to less than a quarter of sales by 2023,” Realtor.com said in a report earlier this month, calling the statistics, “resounding evidence of declining affordability.” cross country.”
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