New-home sale prices dropped 1.5 percent year-over-year to a median of $370,300 in the third quarter, according to a new report from Redfin.
Redfin said the quarterly drop was the biggest since at least 2012 and the third consecutive quarterly decline. During the quarter, new-home sales increased 5.6 percent, marking the second consecutive quarter of increases. New-home supply, meanwhile, decreased 7.9 percent year-over-year.
“Buyers are returning to the new-home market thanks to low mortgage rates and relatively low prices,” Redfin Chief Economist Daryl Fairweather said in a release. “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.
“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.”
The report said the price decline for new homes is partly a reflection of builders responding to buyer demand for affordability, which strengthened sales. It said the surge in sales, along with a nearly 10 percent year-over-year increase in residential building permits, signals the beginning of a moderate recovery for the new-home market.”
“While buyers in Raleigh [N.C.] have always been interested in new homes, construction nearly ground to a halt after the Great Recession as builders were scared of being left with newly built homes they wouldn’t be able to sell,” Redfin agent Allen Wyde said. “In the last two years, builders have loosened the reins and started constructing homes without a buyer in mind. And they're selling.”