New-Home Prices Are Going Up: Here’s Why
A shortage of new home lots – currently at record lows -- will likely prompt home prices to accelerate, according to the National Association of Home Builders.
Read more: Lot Prices Surge to Record Highs
Sixty-four percent of home builders are reporting the supply of new-home lots in their markets was “low” or “very low,” the highest percentage since NAHB began tracking such data in 1997.
“As long as the supply remains constrained and demand remains strong, new-home prices will continue to rise,” says David Brown, regional senior vice president at Metrostudy, a housing data supplier.
The average price of a new home in April was $379,800 – up 13.5 percent from a year ago, according to NAHB data.
“The lack of availability of buildable lots has quickly become one of the biggest issues facing our members,” says Ed Brady, NAHB chairman. “While labor shortages and regulatory burdens remain struggles as well, lot shortages are preventing our builders from responding to the growing demand for housing.”
The lot shortages are most evident out West. Thirty-nine percent of builders in the region reported lot supplies “very low” compared to 23 percent in the South and 18 percent in the Midwest and Northeast.
Metrostudy identified the following markets as seeing the biggest problems surrounding lot shortages – with less than a two-year supply of available lots:
- Austin, Texas
- Boise, Idaho
- Colorado Springs, Colo.
- Dallas-Fort Worth
- Denver
- Houston
- Maryland suburbs of Washington, D.C.
- Nashville
- New Jersey and New York suburbs of New York City
- Northern Calif.
- Portland, Ore.
- Raleigh-Durham, N.C.
- Salt Lake City
- Seattle
- Southern Calif.
Source: “Shortage of New-Home Lots Promises to Drive Up Home Prices,” RISMedia (Sept. 7, 201
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