Average Home Prices 2017

The renewed faith in the American economy that started back in 2010 continued through 2017, resulting in significant increases to the selling price of homes over the past seven years.

In this article, we're going to review the home sales information gathered by the Census Bureau on behalf of the U.S. Department of Housing and Urban Development. We're going to compare the yearend statistics for new home sales and the numbers of homes for sale to those of prior years. We'll also summarize the percentages of new home sales by price paid for the home.

Average Home Prices

With an improving economy, the recovery of the housing market continued to accelerate over the last seven years. In 2017, the median price paid for a new home was $335,400, while the average price paid was $398,900. This represents a 4.0% increase in median home values, and a 3.9% increase in average price paid.

As is the case with all surveys, there are limits to the accuracy of these reports.  In addition, as new information becomes available, preliminary numbers can be restated.

Numbers of New Homes Sold in 2017

There were approximately 608,000 new homes (single family) sold in the United States during the 2017 calendar year.  That's an increase of 8.4% from the 561,000 homes sold in 2016. While the year over year number shows an improvement, they're still considerably less than the 2007 estimate of 776,000 new homes. In December 2017, the annualized rate of new home sales was 625,000, a 16.6% increase from the December 2016 value of 536,000.

Homes for Sale

In December 2017, there were approximately 295,000 new homes for sale in the United States. This is slightly higher than the 2016 value of 235,000, and 40% lower than the 2007 inventory of 496,000.

Putting the information concerning yearend inventory of new homes together with the December annualized rate of new home sales, it's possible to determine the supply of new homes on the market. This value is calculated by taking the homes for sale in December (295,000) and dividing it by the December annualize rate of sales (608,000).

This data tells us there was less than a six-month supply of new homes. Builders have clearly slowed their production significantly since the housing boom of 2006 and 2007. Back in 2009, the median number of months to sell a new home was 14.0, which clearly indicates a large surplus of homes on the market

Average Home PricesIn 2006, the median number of months to sell a new home was 4.3. In that same year, over 1 million new homes were sold. While the pace at which new homes are sold has decreased, builders have maintained their inventories at more realistic levels.

New Home Prices

The average price of a new home sold in 2017 was $398,900, which is significantly higher than the 2016 value of $384,000.  The median price of a new home sold in 2017 was $335,400, which is significantly higher than the 2016 value of $322,500.

The economic recession lowered both the volume and value of new homes sold in America; however, the market stabilization that started in 2010 continued throughout 2017.

Distribution of New Home Prices

The last piece of information we're going to 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 2017.

Percentage of New Home Sold by Price
Year < $150K $150K -200K $200K - $300K $300K - $400K $400K - $500K $500K - $750K > $750K
2004 22% 21% 26% 14% 7% 7% 3%
2005 18% 19% 28% 16% 9% 8% 4%
2006 15% 20% 28% 17% 8% 8% 4%
2007 14% 21% 29% 16% 8% 8% 4%
2008 16% 22% 31% 14% 7% 6% 4%
2009 18% 26% 30% 12% 6% 5% 3%
2010 17% 24% 30% 14% 6% 5% 2%
2011 16% 22% 32% 15% 7% 5% 2%
2012 13% 20% 33% 17% 9% 6% 3%
2013 8% 18% 32% 20% 9% 8% 4%
2014 7% 16% 32% 20% 11% 9% 5%
2015 5% 14% 32% 20% 13% 10% 5%
2016 3% 13% 31% 24% 14% 11% 5%
2017 3% 10% 31% 24% 14% 12% 4%

 

From the above table it's possible to draw the following conclusions about the trend in new home prices:

  • Over the last five years, there has been a steady increase in the number of homes selling for more than $500,000 (9% in 2012 versus 16% in 2017).
  • The vast majority (68%) of new homes sold in 2017 were priced at less than $400,000.
  • Over the last fourteen years, the most popular selling range for new homes was between $200,000 and $299,000.

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