Home shoppers may be able to find a better deal on a new construction home than they could a year ago. A new analysis from online real estate company Zillow finds that price cuts were more common in the fourth quarter of 2018 than in the first quarter.
Across the country, 25.1 percent of new construction homes had a price cut in the fourth quarter, compared with 19.2 percent of new homes in the first quarter of the year.
This mirrors a trend seen in the overall housing market, with price cuts becoming more common.
Eleven percent of buyers last year bought a new construction home, according to the 2018 Zillow Group Consumer Housing Trends Report.
For many of them, everything being new was a top reason for buying a new construction home instead of an existing home. More than a third of new construction buyers also felt it represented the best value for their money – and they might be getting even more value now.
Buyers were most likely to find a price reduction in Denver, where 40.3 percent of new construction homes had a price cut in the fourth quarter of the year. At the beginning of the year, just 21.3 percent of newly built homes had a price cut. In Austin, Texas, price cuts were less frequent at the end of the year than they were at the beginning.
New homes in San Francisco and Los Angeles saw the biggest price reductions in the fourth quarter, at 8.5 percent. However, these markets are also two of the most expensive for new construction homes. The typical new home with a price cut in Los Angeles cost $2 million even after its price dropped.
New construction homes are often more expensive than existing homes, and the upper price range of homes has seen more of a slowdown than the more affordable sector of the market, as demand for affordable housing keeps pressure on prices.
Home value appreciation for homes in the most expensive third of the market is growing at about half the pace of the most affordable third of the market. Higher-valued homes were also more likely to have a price cut than the most affordable homes, according to previous Zillow research.
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