The housing market has been in flux over the past few years, as housing supply shortages, rising prices, and stubborn mortgage rates have dampened buyer enthusiasm.
Homebuying trends and housing market dynamics shifted as buyers became more money-conscious, and sellers became eager for their listings to sell quickly. Younger buyers are more particular about the type of home they want and may be unwilling to settle.
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However, affordability remains the top priority for homebuyers of all ages and will continue to shape market buying patterns.
Berkshire Hathaway HomeServices predicts that as housing inventory increases, the price of newly built homes will converge with that of previously owned homes.
As newly built homes become more affordable, buyers may start to favor the amenities and seek out new builds.
Rising home prices, mortgage rates, and a lack of affordable housing options have weakened homebuyer demand over the past few years. However, Berkshire Hathaway Home Services predicts that newly built homes may become more popular soon.
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Berkshire Hathaway HomeServices anticipates a shift toward new homes in the housing market
Although home prices have increased consistently over the past decade, the Covid-era housing boom raised average housing prices by nearly $150,000 more than 2019 levels.
Affordability remains one of the biggest roadblocks to homeownership, contributing to the housing market gridlock and sluggish buying activity this year. However, older homes have typically been price-effective options for younger buyers on a budget.
Berkshire Hathaway HomeServices expects the price difference between new homes and existing homes to narrow soon.
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The blog makes a pricing prediction, noting “The good news for homebuyers: the median price gap between new and existing homes is narrowing. In 2024, new homes averaged $420,000, while existing homes came in at $412,000 — a difference of just $8,000.”
The negligible difference in cost may prompt homebuyers to consider purchasing a new home with more amenities instead of slightly cheaper existing homes.
“This smaller gap means buyers may opt for a brand-new home with the added benefits of builder warranties and fewer upfront renovation costs. To enhance livability and appeal, builders are increasingly including cost-effective features like porches (in 68% of new homes) and patios (64%), maximizing usable space and making smaller homes feel more functional.”
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Berkshire Hathaway HomeServices predicts home builders will make changes to meet buyer demand
Younger homebuyers — particularly Millennials — are more likely to seek out homes equipped with smart devices, and cite convenience, saving time, and safety as the top benefits.
In a stagnating housing market, builders are hoping to draw buyers back by creating more affordable housing options equipped with modern amenities.
Berkshire Hathaway HomeServices explains that, “Production home builders are addressing the growing demand for smarter, more sustainable homes. These new production homes will likely include many smart home technologies to promote energy-efficiency, automation, and connectivity.”
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The rising popularity of smart devices has shaped how new houses are being built, and the type of capabilities homebuyers expect for existing homes on the market. A quarter of Americans believe smart homes will be the norm within five years, and over 60% believe smart features raise a home’s value.
“Homebuyers are expecting homes to be pre-wired for AI-powered energy management systems and advanced security systems. At the least, they want integrated voice and app-controls for use with Alexa, Google Home, and Apple HomeKit.”
As demand for smart appliances rises, homebuilders will increasingly construct homes that meet homebuyer expectations.
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