Some believe housing starts have struggled because of lot and labor shortages, and high construction cost, but John Burns Real Estate Consulting says it may be a lot simpler than this.

There are markets in California that have home prices above GSE loan limits, which makes it difficult for home buyers to get financing. Now, new home buyers need jumbo mortgages, which are very difficult to obtain and requires large down payments.

Orange County is a perfect example as new home sales have slowed for 10 straight months while sales of existing homes have surged. On average, new homes cost $250,000 more than existing homes in OC.

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