The short answer is NO. According to analyst Buck Horne, the term “entry-level” pricing has been redefined. “To the extent that ‘entry-level’ used to be $200,000, (today) it is more like $300,000 as new entry-level homes surged in demand during August 2019 caused by the sharp drop in supply of new houses in the top 25 house-building markets.”
Supply of new housing has now reached statistical negatives for the first time in 2019. Supply of new entry-level housing is even more negative. Currently, supply of entry-level new housing dropped -3.7% from July 2019 to August 2019 despite the fact that newly built housing overall hit the second highest level in more than a decade.
The National Association of REALTORS® (NAR) points out that supply of existing homes has also dropped as well.
In August 2019, only 10% of all new home sales were for homes priced at $200.000 and under. Home sales for houses priced +$750,000 increased +60% annually.
Builders continue to be focused on move-up and luxury properties. High costs of land, materials, labor and regulatory compliance are barriers, builders say, to building cheaper homes.
Robert Frick, a corporate economist with the Navy Federal Credit Union, said, “Lower interest rates and a healthy job market have finally taken hold in the housing sector. The rise of new home prices is easing, but builders are still not significantly increasing the number of homes built for under #300,000, which half of homebuyers say they need to make a purchase.”
According to Peter Boockvar, chief investment offices with Bleakley Advisory Group, said, “The area of the market that most needs the houses is still not getting it…that is why renting and multi-family will remain strong.”
The red flag waving in housing’s September market was that mortgage rates began rising to nearly three-month highs. Remember agents, the more rates go up, the more buyers’ purchasing power goes down.
Thanks to CNBC’s Diana Ollick for source data.
Also read: https://timandjulieharris.com/2019/09/17/markets-that-may-see-downturn-in-possible-recession.html, https://timandjulieharris.com/2019/10/02/home-prices-in-20-us-cities-show-most-lethargic-rise-since-2012.html, https://timandjulieharris.com/2019/10/07/what-a-difference-a-year-makes-in-terms-of-home-prices.html