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."