The price of new homes is surging - in part because houses are getting bigger

The surge in prices of newly built homes is not as steep as it looks at first glance.

The median price of a new home reached $290,000 in March, the highest level since the U.S. Census Bureau began tracking the figures in the mid-1960s, data released Thursday show. That's up about 11 percent from February, and nearly 13 percent from a year earlier.

The limited supply of properties and higher building costs played a role in the increase. But so has the mix of homes. They're getting bigger and fancier - and therefore pricier - as builders chase after wealthier buyers.

The Census Bureau figures that are most widely quoted -- "new residential homes" -- don't adjust for size or quality; they simply reflect the number of new single-family homes sold. By that measure, new home sales increased 18 percent between 2010 and 2013, according to an analysis by research firm CoreLogic.

But when a home's size and other characteristics are factored in, prices climbed at only half that rate, CoreLogic says. This is reflected in a separate Census index (the "constant-quality" measurement) that's less widely publicized.

"Builders have gone up-market because that's where the demand has been, at least in the past year or year and a half," said Sam Khater, Corelogic's deputy chief economist and author of the analysis.

Here's a chart of the size phenomenon, which shows that the size of the typical new home jumped 9 percent between 2010 and 2013, from 2,392 square feet to 2,598 square feet.

When homebuilder KB Home released its first-quarter results recently, the company said that it is focused on building in "attractive, land-constrained" areas that are teeming with wealthier folks who want larger homes. The builder said its average selling price rose 12 percent to $305,200 in the first quarter from a year earlier.

Here's how KB broke out its shift to the move-up buyer:

But the availability of buyers shrinks as you move up the price continuum, which may explain why new home sales are hurting, Khater said. The government reported Wednesday that sales plummeted 14.5 percent last month, the second straight monthly decline and the lowest rate since July.

Some of the biggest declines in new home sales are out West, where builders have gone especially up-market, Khater said. The government said sales in that region fell nearly 28 percent year-over-year.