Should I back out of a new home and buy something cheaper?

[Chris Allen]

I currently have a new 4:2, 2,050sqft with a 3 car garage under contract for $389k in the last part of Phase I of a 3-4 phase community. This neighborhood butts up to a community that has new homes selling for $500k+ and is right down the street from a community selling $650k+ homes. Due to high property taxes, my monthly PITI is expected to be in the $2,600-$2,900/mo range.

We just had our first child and are a one income family. My income the last two years has been higher because of travel nursing during COVID, but now I'm really thinking about what I really want to spend per month on a home. Not including any rental income, my monthly take home if I were to quit travel nursing would be around $6k/mo. 

Should I back out of the deal and try and find a smaller home that meets our needs and brings our total monthly payment closer to $2k or less, or should I stick with this property in hopes that the value of the home will increase faster?