What the article doesn't say is that, per real estate listings that I've seen in the Houston area, Existing Home prices have been dropping like a rock. Home sale prices have decreased by about 10%-15% since March 2022. A home that would have sold for $500K in March is now selling for $425 to $450K. I watched the asking price of one home (was $550K) drop by $80K within a 2-month time span recently.

At the same time, NEW Home prices are going UP by about 10%-15%, because labor costs have increased, materials prices increased, fuel costs increased, etc... . Inflation is hitting the NEW Home construction costs like it hits everything else, plus there is scarcity of materials too (appliances, construction materials, cabinetry, fixtures, etc...) so that new homes are becoming more difficult to build along with being far more costly. I see New Homes going up with increasingly higher prices... but are competing against dropping Existing Home prices (which were built for far lower costs when inflation was low). The gap between the two is getting wider every month.

Eventually, something is going to break. New home construction costs will be priced far out of the market, so new housing starts will drop to virtually zero. Why build what you can't sell at a profit? Why build what people can't afford to buy? At that point, New Home availability is extremely low... and Existing Home prices will increase again (as being the only viable option) up to the point of affordability based on interest rates.

It's a weird time for the housing market. I've never seen a gap this big, nearly a 35% gap between new home prices and the equivalent existing home prices. The gap can't widen much further before new home sales just disappear, along with a major sector of our economy (and Millions of jobs).