Median Price of New Homes Lowest in Nearly Three Years

The price of new homes fell in September—but not because home builders are lowering prices. Instead, homebuyers themselves are driving the trend by choosing affordable housing options that are on budget. Though the shift is slow, some home builders on pulse with this trend are producing more entry-level options such as smaller homes and townhouses.

The median price of a newly built home dropped sharply in September to $299,4400. That was 8.8% lower compared with September 2018, according to the U.S. Census and was the lowest read since February 2016.

The decline was primarily due to a shift in the mix of homes selling, not any special deals from builders.

Exactly half of the homes that sold in September were priced below $300,000, compared with 43% one year ago. The actual number of home sales for properties priced below $200,000 doubled annually. Meanwhile the number of higher-priced home sales fell.

Mortgage rates likely played some role in the change. The average rate on the 30-year fixed started September at 3.46% and then climbed as high as 3.85% mid-month, according to Mortgage News Daily. The Census sales figures are based on signed contracts for homes, not closings, so they reflect buyers out shopping during the month, when rates were rising.

Sales of newly built homes dropped slightly compared with August, but were 15.5% higher annually.

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