Housing News

New Home Sales Rise as Builders Cut Prices

In a win for buyers, more newly constructed homes are hitting the market, many with lower price tags.

There were 10.9% more new homes for sale and sold in April compared to March, according to the seasonally adjusted numbers in a report from the U.S. Census Bureau and U.S. Department of Housing and Urban Development.

New home sales were also up 3.3% year-over-year in April.

“New home sales continued to rise in April—pointing to a home shopping season that is still very much underway,” Zillow Senior Economist Oprhe Divounguy wrote in a post.

Prices on brand-new homes stayed mostly flat and were less than the cost of buying an existing home. The median new home price was $407,200 in April, according to the report. While that was up 0.8% from March, prices were down 2% year-over-year.

It was also cheaper than the typical existing home that had a median price tag of $414,000 in April, according to the National Association of Realtors (NAR). (Existing homes are properties that have previously been lived in.)

More than a quarter of builders, 29%, reduced prices by an average 5% in April, according to the National Association of Home Builders.

And in another sign that builders are eager to sell their newly built homes, about 61% offered incentives to attract buyers.

“Despite economic jitters, lower mortgage rates combined with strategic price cuts and incentives from builders’ are helping more potential homebuyers,” wrote Divounguy.

Meanwhile, existing home sales dipped 0.5% from March to April and were down 2% year-over-year, according to NAR. That’s despite the number of existing homes on the market rising 9% from March and 20.8% from April of last year.  

“With the highest [housing] inventory levels in nearly five years, consumers are in a better situation to negotiate for better deals,” said NAR Chief Economist Lawrence Yun in a statement.

Where are the most new homes going up for sale?

The Midwest experienced the biggest construction boom. The number of homes for sale and sold in the region jumped 35.5% from March to April, according to the report. Sales were also up 1.2% year-over.

Home sales were also up in the South, by 11.7% month-over-month and 6.5% year-over year. In the West, sales ticked up 3.3% compared to March and rose 1.3% from April of last year.

However, home sales dropped in the Northeast in April. They slid 14.8% month-over-month and fell 25.8% year-over-year.