The Housing Headline
Home buyers returned to new construction in April and found that builders were willing to negotiate.
The News Behind The Housing Headline
New home sales rose in April, lifted by sales activity at lower price points typically linked to first-time buyers.
According to the U.S. Census Bureau, sales of newly-built homes rose 0.3 percent nationwide last month as compared to March, as the inventory of new construction homes properties fell two percent to 325,000.
The government group also reports rising interest in less expensive homes.
13 percent of new homes purchased in April sold for less than $200,000, which represents the largest market share for the sub-$200,000 price point in more than two years. It’s also a stark four points higher than last year’s average, suggesting high levels of first-time buyer activity.
Through the first three months of this year, the average home purchase price for buyers born after 1980 was $211,097.
Why This Housing News Matters To You
Last week, the National Association of Homebuilders released its monthly confidence report, which showed rising builder optimism for the next six months in real estate.
Builders are the front-line of the U.S. housing market and, today, it’s clear why builder confidence is up.
With much of the country under lockdown last month, virtual home showings increased in April, and more buyers and builders went under contract. Sales projections are rising for the next six months, and real-time mortgage rates are favorable.
Savvy home buyers are still finding deals in new construction, however.
The Census Bureau data showed that 30 percent of the new homes sold in April hadn’t even broken ground, which is a two-year high. It’s also a signal to new home buyers.
An uptick in pre-sold homes suggests that U.S. homebuilders are actively limiting their exposure to the long-term risks of COVID-19 and that they’re willing to make deals to sell homes. Builders don’t like holding unsold inventory in a recession, and revenue today is better than revenue tomorrow.
At the current rate at which buyers are buying, every new home for sale would sell in a little more than 6 months, which suggests a buyer’s market, if only temporarily. Today’s new home buyers have leverage in negotiation.
Builders may not be willing to lower prices, but it’s a good time for first-time buyers to ask for upgrades and concessions – especially at lower price points.
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