Increase in Building Permits and Sales May Mark Future Housing Recovery

Get them while they’re hot: some builders are lowering prices in response to buyers’ demands for affordability. Combined with low mortgage rates, the low prices enabled buyers to make the jump toward homeownership, leading to the second consecutive quarter of increases in home sales.

New-home sale prices dropped 1.5 percent year over year to a median of $370,300 in the third quarter. That marks the biggest decline since at least 2012 and the third consecutive quarter of declines.

Meanwhile, new-home sales rose 5.6 percent, marking the second consecutive quarter of increases.

The price decline for new homes is partly a reflection of builders responding to buyer demand for affordability, which strengthened sales, as we predicted it would.

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