The renewed faith in the American economy and housing market that came to a screeching halt in 2019 picked up again 2020, resulting in an increase in the selling price of homes over the past year.
In this article, we are going to review the home sales information gathered by the Census Bureau on behalf of the U.S. Department of Housing and Urban Development. We are going to compare the yearend statistics for new home sales and the numbers of homes for sale to those of prior years. We will also summarize the percentages of new home sales by price paid for the home.
Average Home Prices
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With a slowing economy, the recovery of the housing market slowed down in 2019 only to renew itself again over the last year. In 2020, the median price paid for a new home was $355,900, while the average price paid was $394,900. This represents a 11.0% increase in median home values, and a 3.4% increase in the average price paid.
As is the case with all surveys, there are limits to the accuracy of these reports. In addition, as new information becomes available, preliminary numbers can be restated.
Numbers of New Homes Sold in 2020
There were approximately 811,000 new homes (single family) sold in the United States during the 2020 calendar year. That's an increase of 18.8% from the 683,000 homes sold in 2019. In December 2020, the annualized rate of new home sales was 842,000, a 15.2% increase from the December 2019 value of 731,000.
Homes for Sale
In December 2020, there were approximately 302,000 new homes for sale in the United States. This is slightly lower than the 2019 value of 331,000, and 39.1% lower than the 2007 inventory of 496,000.
Putting the information concerning yearend inventory of new homes together with the December annualized rate of new home sales, it is possible to determine the supply of new homes on the market. This value is calculated by taking the homes for sale in December (302,000) and dividing it by the December annualize rate of sales (842,000).
This data tells us there was just over a four month supply of new homes. Builders have clearly slowed their production significantly since the housing boom of 2006 and 2007. Back in 2009, the median number of months to sell a new home was 14.0, which clearly indicates a large surplus of homes on the market.
In 2006, the median number of months to sell a new home was 4.3. In that same year, over 1 million new homes were sold. While the pace at which new homes are sold has decreased, builders have maintained their inventories at more realistic levels.
New Home Prices
The average price of a new home sold in 2020 was $394,900, which is slightly higher than the 2019 value of $381,900. The median price of a new home sold in 2020 was $355,900, which is slightly higher than the 2019 value of $320,700.
The economic recession lowered both the volume and value of new homes sold in America; however, the market stabilization that started in 2010, which stalled in 2019, continued the upward climb again in 2020.
Distribution of New Home Prices
The last piece of information we're going to extract from this survey has to do with the distribution of new home prices. The table below illustrates the range of new home sales prices for the calendar years 2004 through 2020.
Percentage of New Home Sold by Price
Year | < $150K | $150K -200K | $200K - $300K | $300K - $400K | $400K - $500K | $500K - $750K | > $750K |
2004 | 22% | 21% | 26% | 14% | 7% | 7% | 3% |
2005 | 18% | 19% | 28% | 16% | 9% | 8% | 4% |
2006 | 15% | 20% | 28% | 17% | 8% | 8% | 4% |
2007 | 14% | 21% | 29% | 16% | 8% | 8% | 4% |
2008 | 16% | 22% | 31% | 14% | 7% | 6% | 4% |
2009 | 18% | 26% | 30% | 12% | 6% | 5% | 3% |
2010 | 17% | 24% | 30% | 14% | 6% | 5% | 2% |
2011 | 16% | 22% | 32% | 15% | 7% | 5% | 2% |
2012 | 13% | 20% | 33% | 17% | 9% | 6% | 3% |
2013 | 8% | 18% | 32% | 20% | 9% | 8% | 4% |
2014 | 7% | 16% | 32% | 20% | 11% | 9% | 5% |
2015 | 5% | 14% | 32% | 20% | 13% | 10% | 5% |
2016 | 3% | 13% | 31% | 24% | 14% | 11% | 5% |
2017 | 3% | 10% | 30% | 24% | 14% | 13% | 5% |
2018 | 3% | 9% | 30% | 25% | 15% | 13% | 6% |
2019 | 2% | 8% | 33% | 25% | 14% | 13% | 5% |
2020 | 1% | 7% | 31% | 28% | 16% | 12% | 5% |
From the above table it's possible to draw the following conclusions about the trend in new home prices:
Over the last six years, there has been a steady increase in the number of homes selling for more than $500,000 (14% in 2013 versus 19% in 2018) before falling back to 18% in 2019 and 17% in 2020.
The vast majority (67%) of new homes sold in 2020 were priced at less than $400,000.
Over the last seventeen years, the most popular selling range for new homes was between $200,000 and $299,000.
Ever wondered how much it costs to build your house? It may not be completely out of reach — here are some resources on this:
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