Odeta Kushi Sees Housing Prices Fall to $387,400 in March
Housing prices for new construction fell to $387,400 in March, the lowest level in nearly five years, as builders leaned on price cuts to keep buyers moving. The drop comes as new home sales held at a seasonally adjusted annual rate of 682,000, giving shoppers more leverage in markets where older homes still draw multiple offers.
Odeta Kushi on builder pricing
6.2% was the year-over-year drop in new construction home prices, a shift that has pushed more supply into the $300,000 to $400,000 range, the largest segment of the market. Odeta Kushi, deputy chief economist at First American, said builders have room to draw in sidelined buyers: "We know that there's pent-up demand for home buying, and I think that builders have the tools to be able to bring some of those buyers off the sidelines".
18% of the new-home market was priced below $300,000 in March, up from 14% in 2023. That change shows how builders are moving down-market to meet affordability limits, especially as older homes continue to appreciate more slowly and remain harder to win in competitive bid situations.
Minneapolis-St. Paul buyer choices
One $500,000 existing home can still trigger multiple offers in Minneapolis-St. Paul, realtor Brandon Archie said, which is pushing some clients toward new construction instead. He said, "If you take a $500,000 existing home, more than likely in our market, there are going to be multiple offers, which is going to drive that price up".
Buyers in that market often have to raise their cash contribution or give up protections just to stay competitive, Archie said: "Buyers end up having to do things like either putting more money down or waving a home inspection — just anything to be competitive in that market". He added, "It's a pretty good mix of people choosing to go to new construction versus existing".
Austin, Cape Coral, Sarasota
6% was the average discount for a new construction home versus an older home in the Austin, Texas, area in the first quarter of this year, while Cape Coral and Sarasota showed even wider gaps at 13.5% and 7.7% less, respectively. Builders have been slashing prices in high-supply markets in the Southeast and Mountain West, and they have also been building smaller homes with simpler finishes to keep monthly costs in reach.
$15,000 off the list price plus $5,000 for closing cost assistance or an interest rate buydown was one buyer's package in Minneapolis-St. Paul, a deal that shows how builders are pairing lower sticker prices with financing help. Archie said, "Once you get to a certain price point, kind of like that $500,000 price point, it almost becomes cheaper to buy new construction".
