Low prices are reeling buyers back to the new-home market, says Redfin

Sales of newly-built homes perk up as prices plummet for the third quarter in a row

Low prices are reeling buyers back to the new-home market, says Redfin

As builders start to fill in the inventory gap with new homes, more Americans are seizing the opportunity to buy these low-priced new homes.

New-home sale prices fell 1.5% annually to a median of $370,300 in the third quarter, marking their biggest drop since at least 2012, according to Redfin’s latest report

The decline spurred an increase of 5.6% in new-home sales, which continued to rise for the second straight quarter. The supply of new homes experienced its largest inventory cut since 2012, shrinking 7.9% year over year.

"Buyers are returning to the new-home market thanks to low mortgage rates and relatively low prices," said Redfin Chief Economist Daryl Fairweather. "And builders, also taking advantage of low-interest rates to fund projects, are paying attention to preferences for affordability, which has led to more sales.

The trend was the same for existing homes as prices climbed 4.2% and sales increased by 2.1%, while inventory sank 6.9%.

The price decline for new homes was partly a reflection of builders’ efforts to meet buyers’ demand for affordability, which boosted sales, according to Redfin.

The surge in sales, along with an approximate 10% year-over-year gain in residential building permits, indicates the start of moderate recovery for the new-home market.

“Residential construction was a bright spot in the economy in the third quarter, a sign that builders are working to fill an inventory gap,” Fairweather said. “As we head into the new year, I expect more new-home listings to hit the market, which should help sustain the relatively high level of sales."

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