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 Buying a home normally provides the homeowner with both a place to live as well as the prospects of earning a respectable return on their investment. But with the downturn in the economy, the average price for a home decreased to $292,400 in 2008, a decline of 6.8% from the average home price of $313,600 in 2007.
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 review will include the numbers of homes sold in 2008, as well as the number of homes for sale at the close of the year. We're also going to summarize some of the 2008 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 2008 statistics relating to new home prices, sales of homes, and homes for sale. This information is based on surveys conducted by the two U.S. government agencies mentioned earlier, 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 2007 and 2008, we will indicate if a change was not statistically significant.
New Homes Sold in 2008
There were approximately 483,000 new homes (single family) sold in the United States during the 2008 calendar year. That's a decrease of 37.8% from the 776,000 home sold in 2007, and a 54.0% decrease from the 2006 volume of 1,051,000. In December 2008, the annualized rate of new home sales was 344,000, a 42.7% slowdown from the December 2007 value of 600,000.
Throughout 2008, the United States housing market experienced a somewhat consistent pattern of declining new home sales each month.
Homes for Sale
At the end of 2008, there were approximately 353,000 new homes for sale in the United States. Since we also know the December annualized rate of sales was 344,000, we can conclude that at the end of 2008 there was over a 12-month supply of new homes for sale. From this information, we know that, on average, it would take over 12 months to sell a home that was for sale at the end of 2008.
This value is calculated by taking the homes that were for sale at the end of the year (353,000) and dividing it by the December annualized rate of sales (344,000) and multiplying the resultant percentage (103%) times 12 months (12.3 months).
The new home sales data also tells us that in 2008, the median number of months it took to sell a home, once its construction was completed, was 9.2 months. In 2007, the median number of months to sell a new home was 6.2, while in 2006 that value was 4.3 months. The median is the mid point in any data. So this data tells us that 50% of the new homes took less than 9.2 months to sell and 50% took more than 9.2 months to sell.
This data also tells us that from 2006 to 2008, the time it took to sell a new home more than doubled - from 4.3 months to 9.2 months.
New Home Prices
The average price of a new home sold in 2008 was $292,400, which represented a statistically significant decrease from the 2007 value of $313,600. The median price of a new home sold in 2008 was $231,400, which was also a statistically significant decrease from the 2007 value of $247,900.
With the economic recession in full swing, it's easy to understand how new home prices suffered this decline.
Distribution of New Home Prices
The last bit of information we'll extract from this survey has to do with the distribution of new home prices. The table below illustrates the range of new home sales prices for the calendar years 2004 through 2008.
Percentage of New Home Sold by Price
| New Home Sales Price |
2004 |
2005 |
2006 |
2007 |
2008 |
| < $150,000 |
22% |
18% |
15% |
14% |
16% |
| $150,000 - $199,999 |
21% |
19% |
20% |
21% |
22% |
| $200,000 - $299,999 |
26% |
28% |
28% |
29% |
31% |
| $300,000 - $399,999 |
14% |
16% |
17% |
16% |
14% |
| $400,000 - $499,999 |
7% |
9% |
8% |
8% |
7% |
| $500,000 - $749,999 |
7% |
8% |
8% |
8% |
6% |
| > $749,999 |
3% |
4% |
4% |
4% |
4% |
From the above table we can draw the following conclusions about historical new home prices:
- When comparing 2007 to 2008, there was sharp decrease in the percentage of new homes selling for more than $300,000 (36% in 2007 versus 31% in 2008).
- In 2008, nearly 70% of all the new homes purchased in the United States were sold for less than $300,000.
- Over the last five years, the most popular selling range for new homes was $200,000 to $299,000.
- In 2008, only 10% of new homes sold for more than $500,000. This was the lowest percentage for homes in that price range since 2004.
About the Author - Average Home Prices 2008
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