If you’ve always thought a brand new home was out of reach financially, you may want to take another look because the numbers are starting to work a little more in buyers’ favor.
The median price for a newly built home has dropped to its lowest point since 2021, according to the latest Census data. And builders are still offering incentives to help make buying a little easier for today’s buyers.
So what’s behind it all, and what does it mean for you if you’re house hunting right now?
Prices on Newly Built Homes Have Come Down
After prices shot up during the pandemic, things have started to level out a bit. The median price for a newly built home is now around $390,000, which is the lowest it’s been in nearly five years (see graph below):
While every local market is a little different, the overall trend is leaning more in buyers’ favor, especially for first-time buyers. According to Zonda, prices for entry-level homes have dropped about 2.7% over the past year, a larger dip than in any other price range.
That doesn’t mean every home in every market is suddenly within reach. But it does mean that, in general, new builds are priced better right now than they have been since 2021 if you’re in the market to buy.
Why This Isn’t a Repeat of 2008
And if you’re wondering, lower prices don’t mean the new home market is struggling. Builders are being much more strategic these days, keeping inventory under control so it doesn’t build up like it did back in 2008.
If you look back at the graph, you’ll notice that even with the recent dip, new home prices are still higher than they were before the pandemic. So this isn’t a crash. It’s really more about builders adjusting their strategy to keep homes moving.
Homebuilders Are Still Sweetening the Deal
Lower sticker prices aren’t the only way buyers are getting a bit of relief right now. According to the National Association of Home Builders (NAHB), about 60% of builders are offering some kind of incentive to help attract buyers. That often looks like:
Help with closing costs: Some builders are covering thousands of dollars in fees, which helps bring down your upfront expenses when you buy.
Extra upgrades: Things like better finishes, appliance packages, and upgraded features are sometimes included at no extra cost.
Mortgage rate buydowns: This is when the builder helps lower your interest rate, which can make your monthly payment more affordable.
Price cuts: More than one in three builders (36%) are lowering prices right now, with an average drop of about 5% off the list price (see graph below):
That last point surprises a lot of buyers since most people assume builders won’t be willing to negotiate on price.
But builders are in a different situation since they need to sell the homes they’ve already built. That’s a very different mindset compared to a homeowner deciding whether or not to lower their price. Because of that, you may find they’re more flexible than you’d expect when it comes to pricing. As Joel Berner, Senior Economist at Realtor.com, puts it:
““. . . many existing-home sellers resort to taking down their listing instead of taking less than their desired price, but builders are more motivated to sell their inventory than owner-occupants . . .”
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And if you look at the version of the graph that includes 2008 prices, you can even point that out in this explanation.
And while we’re here, do you think I should tweak the last sentence of the lede?
Bottom Line
Builder incentives and lower new home prices are giving you an advantage you really haven’t seen in years. If you’re curious about what’s available nearby and what kind of deal a builder might be open to, let’s connect.
