Price Discrepancy Hurting New Home Sales

Washington, DC, March 31, 2011 -- New home sales aren't likely to increase much until the price discrepancy between new and existing homes narrows, experts say.

New homes are currently 29% more expensive than existing homes, about double the typical margin, according to the National Association of Realtors. That margin is likely to grow as existing home prices are projected to fall this year as more foreclosures enter the market.

Existing home sales are down about 3% in the last year, according to NAR data. However, new home sales have fallen 28%, according to the U.S. Census.

Nationally, there are around 186,000 new homes on the market right now, the lowest since 1967.

Experts also say that a shift in consumer psychology has also hurt new home sales as buyers are more enthusiastic about a home that's easier and cheaper to maintain, and less interested in amenities like high end appliances and countertops.