Dive Brief:
- For a variety of reasons, new homes – almost always more expensive than existing homes – have had an average 36.5% price gap over the past two years, way beyond pre-recession margins, but some economists think that may be changing.
- The thought among economists is it's inevitable that first-time buyers will return to the market as loan standards ease a little. Home builders will also shift products back toward those customers after concentrating on high-end homes in recent years.
- The backlog of distressed homes is also falling every month, which will raise existing-home prices. And July's fall in new-home sales last month suggests inventory there may be growing, a downward pressure for prices.
Dive Insight:
Some of the economists who predict the declining gap is Jed Kolko, who is chief economist for Trulia. Another is Brad Hunter, chief economist at Hanley Woods' Metrostudy subsidiary. The July 2014 gap in median prices was 21%, contrasting with 12.8% in July 2008 and 7.8% in July 2007.