A Closer Look at New Home Prices

May 30, 2013
Higher prices are encouraging housing market activity, a positive sign for buyers and sellers.

The median price of a new home in April was $271,600, a record high for the industry.  April is $9,000 above the March 2007 pre-recession peak and $66,500 above the March 2009 recession low.  The latest run up in prices has lasted 17 months and has produced a 26.7% increase in the median new home price. 

Those are the facts, now a few observations:

1. The above relates to the US new home prices – existing home prices have not fully recovered yet (e.g. NYC area and New England in general have not, but Austin TX has).  The good news is that even if you are still underwater the general economic momentum is on your side.

2. Higher home prices make it easier for people to sell their homes to move to where the jobs are or to get out from under an unaffordable mortgage.  Either way it is a path to personal economic recovery and stability.

3. Do not believe it when someone tells you there is no inflation.  New and existing home prices are up year-over-year and new home prices are up 26.7% over the last 17 months.  This increase is slightly steeper than the two rising trends that occurred in the 1970-77 and the 1979-81 events.  Higher prices are good news today, as they will encourage housing market activity.  Bottom line – buy now.

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