Are Existing Homes Really Selling for More Than New Homes?

March sales data found median prices for existing homes were higher than newly built homes for the first time in 15 years, but CNBC says there’s more to the story. New home prices reached $330,800 in March, according to U.S. Census data, while existing home prices reached $334,500. The reasoning for changing prices comes from the shortage of lower-priced homes, says CNBC. The National Association of Home Builders says that on a per-square-foot basis, a new home is still priced higher than an existing one. The housing shortage has been particularly hard on lower-priced homes, resulting in less selling, skewing sales data to the higher end.

For example, the number of existing homes priced between $100,000 and $250,000 that sold in March was down 10% from a year ago, according to the NAR, simply because there are so few for sale. Demand is high. Meanwhile, the number of homes priced between $750,000 and $1 million that sold was up 82% from a year ago. Sales of million-dollar-plus homes were up a stunning 108%. That skews the median much much higher.

There is also a tight supply of lower-priced new homes. The reason is twofold. After the housing crash just over a decade ago, there were so many relatively new, low-end foreclosures for sale that when builders did start producing again, they focused on the move-up market. It is also harder to build cheap homes now because commodity and land prices are skyrocketing. New home prices at face value are still rising sharply.