For at least a decade the average price difference between new and old homes was at $60,000. Now it’s less than $15,000|Deane Bayas

The median price of a previously owned single-family home in the U.S. was at $416,000 in June, which is the same rate as a newly built house sold in May, reports Axios.

It doesn’t take much to know that old houses should technically cost less than new ones due to the repair and reconstruction costs attached to them. For at least a decade that was the case, with the average price difference between new and old homes being $60,000.

Now it’s less than $15,000.

Why?
One of the largest driving factors for such drastic change in real estate prices has to do with the Federal Reserve’s rate hikes. 

With interest rates almost at 7% now, they have created a “lock-in effect” among homeowners and many don’t want to forego the lesser mortgage rates they have had since the pandemic.

So the number of homeowners willing to sell is dwindling. They either stay in the same property or rent it out, say real estate experts.

At the same time, demand from first-time buyers is steady and rising. So to manage this, builders are offering new homes at similar prices to old ones.