First-time home buyers aren’t finding many affordable options these days as the share of starter homes priced below $200,000 has dwindled more than any other segment over the past five years, according to U.S. Census data and reported by Chris Kirkham of The Wall Street Journal.
New homes under $200,000 made up 19% of U.S. sales last year, down from 38% four years earlier. By contrast, homes sold between $300,000 and $500,000 accounted for 34% of new home sales last year, up from 22% in 2011.
Data from real-estate tracker Trulia shows a similar trend: The share of new homes built in the bottom third of price distribution shrank from 16% of the market in 2000 to 7.9% by 2015. New homes in the top third of the price distribution grew from 57% of total construction in 2000 to nearly 69% last year, according to an analysis by Ralph McLaughlin, the group’s chief economist.
With the high cost of land and labor, it’s hard to turn a significant profit on entry-level homes. “The move-up market has been much more profitable per house than the entry level,” said housing economist Brad Hunter, chief economist at HomeAdvisor, an online home services marketplace. “Builders decided ‘Well, let me deploy my resources where I can get the best return.’”
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