New-Home Prices Are on Fire

The uptrend in resale values is nothing compared to the speedy rise in new-home prices, according to research by economists at TD Securities.

New Home with everything you wantNew homes generally command a 10 to 20 percent premium over existing houses because new construction tends to be of higher quality and have more up-to-date amenities, the TD economists said. But by 2014, the price gap between new and existing houses had widened to 40 percent.

Bargain-seeking plus the flood of existing homes into the market caused the median resale price to plummet by about one third during the bust; meanwhile, the median price for a new home fell only about 25 percent during the bust and surpassed its boom peak way back in early 2013.

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Source: Wall St. Journal