NEW YORK – Nov. 25, 2013 –Newly built residences in the United States are getting pricier as older, high-earning buyers have rebounded more quickly from the recession than entry-level buyers. This, in turn, has prompted more home builders to go upscale to match the shift.
Builders, of course, continue to erect entry-level houses, but demand is depressed from traditional levels. The national rate of new-home sales in 2013 is roughly 50 percent of the typical 800,000, due primarily to the falloff in entry-level and first-time buyers.
“It will be gradual, but it will be at least several years before we see the participation of the first-time buyer come back to normal [levels],” says David Crowe, chief economist for the National Association of Home Builders. “In the meantime, the [new-home] market will lean toward the upper end.”
Lower-end buyers remain hampered by strict qualification standards for home loans and requirements by many lenders for hefty downpayments. For many, purchasing an existing house, sometimes out of foreclosure, is often more affordable than buying a new one.
At the same time, more affluent buyers have reaped higher earnings due to factors such as stock-market gains and improving home equity.
In this year’s second quarter, sales of new homes priced in the $300,000 to $400,000 range rose to 21 percent of all sales from 13 percent four years ago, Census figures show. Over that same time span, sales of new homes priced from $150,000 to $200,000 fell from 25 percent to 19 percent.
Source: Wall Street Journal (10/24/13) P. A3; Hudson, Kris
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