Buy New or Buy Used New Home Construction Costs Outweigh ExistingHome Costs

first_imgBuy New or Buy Used? New Home Construction Costs Outweigh Existing-Home Costs November 4, 2015 446 Views in Daily Dose, Data, Featured, Market Studies, News, Origination Sharecenter_img The cost of building a new single-family home far surpasses the average price tag on an existing home, but aside from mortgage payment differences, there are pros and cons to both options.The National Association of Home Builders’ most recent Cost of Construction Survey showed that the average home was built on about half an acre of land (20,129 square feet), had 2,802 square feet of finished space, and sold for an average of $468,318, the highest average since the survey began in 1995.Now, compare this price to the National Association of Realtors’ (NAR) report last month, which showed that the median existing-home price for all housing types was $221,900 in September, 6.1 percent above the $209,100 recorded during the same period last year  September 2014. NAR’s report said that this increase marks the 43rd consecutive month of year-over-year gains.Supply and demand challenges are expected to slow down existing-home sales to early summer levels at 5.44 million units, according to Auction.com’s Real Estate Nowcast.On a wider scale, Auction.com projects that existing home sales for the month of October will fall between seasonally adjusted annual rates of 5.26 and 5.61 million annual sales, with a targeted number of 5.44 million. This is 2 percent below September’s number, but still in line with sales recorded during the early summer months.“Challenges on both the supply and demand side appear to be slowing down existing home sales,” said Rick Sharga, Auction.com, EVP, “Inventory levels remain stubbornly low, especially for entry-level buyers, despite rising home prices, and credit is still very tight for the average borrower. The good news is that, considering the weaker than expected jobs numbers, and the usual seasonal dip in purchase activity, it doesn’t appear that sales will fall off significantly for the balance of the year.”Black Knight Financial Services’ August 2015 Home Price Index (HPI) showed that average home prices reached $253,000 in August and is now just 5.3 percent off its June 2006 peak of $268,000. In addition, the HPI is up over 27 percent from the market’s bottom in January 2012.NAHB’s data on the total cost of construction included a host of costs that contributed to the grand total of nearly half a million dollars. The largest surprise and the largest share of the costs was the total construction cost, which was $289,415, and 61.8 percent of the price.The price gaps on these homes can severely affect the mortgage payment that a consumer will make every month, but a study from GOBankingRates breaks down the pros and cons of building a home or purchasing an existing home while looking at the costs that a consumer may incur in the process.”There are pros and cons that everyone faces during the home-buying process and there’s no one-size-fits-all answer,” the study said. “The choice between building vs. buying a home can be tough and greatly depends on what options you have available to you.” Construction Costs Existing-Home Costs National Association of Home Builders 2015-11-04 Staff Writerlast_img

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