New homes see price decline, though inventory remains low

Aly J. Yale
The Mortgage Reports contributor

A new home deal

If you’re looking to buy a new construction home, then you’re in luck. According to new data, prices are down on new homes, while those on existing homes continue to rise.

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Prices on new homes notch down

According to data from real estate brokerage Redfin, prices on new homes are down 0.5 percent over the year, clocking in at just under $373,000 last quarter. 

As Redfin data journalist Dana Olsen explains, “Prices for new homes have remained largely unchanged throughout the first half of this year after seven straight years of increases.”

The dip is a welcome relief for buyers, who are already facing rising prices on existing homes. The median sale price on existing properities jumped 3.2 percent last quarter. 

New home prices dropped the most in San Jose, California, which saw a 26.6 percent decrease. Florida’s West Palm Beach saw a 16.7 percent downslide, while Honolulu’s new home prices dropped 13.6 percent. 

Builders are slashing new construction prices; here’s where they’ve been cut the most

New home supply remains low

It’s not all good news for new-home buyers, though. The same data shows that inventory on new construction homes is down, notching a full percentage-point drop in just the last quarter. It’s the biggest decline in new home inventory in at least six years.

New home construction lags — but not in these four cities

According to Daryl Fairweather, Redfin’s chief economist, the dip in prices is a sign that homebuilders are focusing on less-profitable homes. As a result, it could mean low inventory for a while.

“As builders continue to adjust to a less favorable market, along with rising tariffs for building materials and a labor shortage, I expect to see new-home inventory stay low overall,” Fairweather said. “But low mortgage rates and more affordable prices for new homes mean sales could strengthen a bit in the coming months.”

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Verify your new rate (Jul 14th, 2020)