Average Home Prices 2007

Real estate has traditionally been a very good investment as demonstrated by the annual increase in average home prices throughout the United States.  In fact, in 2007 the average price of a new home rose to $313,600, an increase of 2.5% from the average home price in 2006 of $305,900.

In this publication, we're going to summarize some of the home sale information gathered by the Census Bureau and the U.S. Department of Housing and Urban Development.  That summary will include the numbers of homes sold in 2007, as well as the number of homes for sale at the close of the year.  We're also going to summarize some of the 2007 data into tables including the percentage of new home sales by sales price.

Average Home Price

Throughout this publication, we're going to be providing 2007 statistics relating to new home prices, sales of homes, and homes for sale.  This information is based on surveys conducted by U.S. government agencies, and as is the case with all surveys, there are limits to the accuracy of the survey itself.

To help better understand meaningful changes, when making comparisons between the years 2006 and 2007, we will indicate if a change was not statistically significant.

New Homes Sold

In 2007, there were approximately 776,000 new homes (single family) sold in the United States.  That value was down approximately 26.2% from the 1,051,000 homes sold in 2006.  In December 2007, the annualized rate of new home sales was 600,000.

What this information tells us is that as the year progressed, the rate of new homes sold slowed down - December's annualized rate (600,000) was lower than the number sold in that same year (776,000).

Homes for Sale

At the end of 2007, there were approximately 496,000 new homes for sale in the United States.  Since we know the December annualized rate of sales was 600,000, this tells us that at the end of 2007 there was nearly a 10-month supply of homes for sale.  Meaning that, on average, it would take 10 months to sell all the new homes for sale at the end of 2007.

That value is found by taking the homes for sale at the end of the year (496,000) and dividing it by the December annualized rate (600,000) and multiplying that percentage times 12 months.

The data also tells us that in 2007 the median number of months it took to sell a home, once construction was completed, was 6.2 months.  In 2006, the median number of months to sell a new home was 4.3 months.  As a reminder, the median is the mid-point in data.  This means that 50% of the new homes took less than 6.2 months to sell and 50% took more than 6.2 months to sell.

New Home Prices

The average price of a new home sold in 2007 was $313,600, which did not represent a statistically significant increase over the 2006 value of $305,900.  The median price of a new home sold in 2007 was $247,900, which was also not a statistically significant increase from the median new home sales price of $246,500.

This means that new home prices from 2006 to 2007 were relatively flat - they really didn't change.

Distribution of New Home Prices

Finally, the table below illustrates the range of new home sales price for the calendar years 2004 through 2007.

Percentage of New Home Sold by Price

The conclusions we can draw from the above table include:

• Over the last four years, about 20% of all new homes were purchased for $150,000 to $199,999.
• The second most popular price range for new homes in 2006 and 2007 was $300,000 to $399,999.
• Between 2004 and 2007, the number of new homes selling for less than $125,000 dropped by more than half - from 11% of the homes sold in 2004 to only 5% sold in 2007.
• Only 12% of new homes sold in the United States in recent years were purchased for more than $500,000.

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