A rare pricing flip in the U.S. housing market, something that hasn't happened in over half a century, is puzzling analysts, who worry that it might be indicative of deeper structural issues.
Reversal Of Historic Pricing Trends
On Thursday, in a post on X, The Kobeissi Letter said, “the US housing market is broken,” while noting that the average prices of new single-family homes have been lower than that of existing homes over the past year, “the first such occurrence in 54 years.”
The shift marks a stark reversal from historic trends, where newly built homes have almost always commanded a premium due to modern construction, updated features and limited new supply relative to existing inventory.
Citing data from Apollo Chief Economist, the U.S. Census Bureau and the National Association of Realtors, the post notes that the price of a new home fell below the price of an existing home “for the first time since 2005.”
The post also highlights how dramatic the swing has been compared to recent years. “By comparison, new homes were 10% more expensive just 3 years ago, measured by the 12-month moving average,” it said, adding that “the difference was as much as 40% in 2012,” following the 2008 financial crisis.
It concludes by saying, “Something is seriously wrong with the housing market.”
Record Delistings And A Growing Affordability Crisis
Amid these unusual structural issues, there have been other trends in the housing market that have caught the attention of analysts in recent weeks.
Earlier this week, it was reported that home delistings touched a record high in September, at 85,000, which marks an increase of 28% from the prior year. This has been attributed to homeowners who are unwilling to accept low offers amid slow buyer demand, according to an analysis by Redfin.
“Many homeowners who bought during the pandemic demand frenzy still expect sky-high prices. They remember a seller’s market, so they’re hesitant to yield to buyers who want to negotiate the price down and/or ask for concessions,” said Asad Khan, senior economist at Redfin.
At the same time, the share of first-time home buyers in the U.S. has fallen to a new low, at just 21%, down from a long-time average of 38%. The average age of first-time home buyers, too, has touched a new record high of 40.
This comes amid record prices and scarce supply across key regions, which continue to shut newcomers out of the markets.
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