Are Homebuyers Being Priced Out of New Homes?
New construction also comes with a typical 20% premium versus existing stock adding additional fuel to the fire of rising home prices, so Knock compared the median household income and the median new home sales price in the nation's largest metropolitan areas with the most active new home markets to determine just how much relief new construction will provide as buyers—especially first-time homebuyers—are grappling with affordability in a highly competitive housing market. According to Knock, to afford the mortgage on a $390,900 home (the current median price of a new home), a buyer making a 6% down payment (assuming 30 years at an interest rate of 3.04%) would need to earn $80,000 a year, pricing out 60% of Americans as the national median household income is $67,521. Based on median household income, the average time it takes to save for a down payment on a new construction home for first-time homebuyers is 15 years.
