Newly Constructed Homes Cutting Prices

According to a new Zillow report, 25.1% of the nation’s newly-constructed homes had their sale prices cut during the fourth quarter of 2018, up from 19.2% of new homes in the first quarter of last year.
At the regional level, Denver had the highest share of new homes with price cuts, at more than 40%. San Francisco and Los Angeles both had the steepest average price cuts at 8.5%, though MarketWatch’s Jacob Passy notes the average new LA home still costs $2 million, even after the price cuts.
Faced with high construction costs, builders chose to construct larger, more expensive properties in a bid to fetch a higher sales price. However, rising home prices have kept many would-be buyers on the sidelines in a trend that shows no sign of stopping thanks to the tight inventory across many housing markets nationwide.
But builders aren’t necessarily getting desperate. Indeed, home-builder confidence rebounded from a three-year low this month, according to the results of survey from the National Association of Home Builders. That could be because fewer new homes are getting built these days, which increases the likelihood that they will be sold for a price above asking.

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