Why New Construction Homes Might Be Buyers' Best Bets In 2023
It's no secret that the cost of houses and mortgages has been increasing, and the availability of houses on the market has gone down. Last month, $441,000 was the median listing price for houses across the country, which is $11,000 higher than it was in April. This month, it's expected to increase even more. "Historically, we typically see home prices top out in June," Danielle Hale, Chief Economist with Realtor.com, said in an interview with the company. "I expect this year will be typical in that regard, with home prices hitting their highest level in June and retreating beginning in July."
While the cost of existing homes continues to skyrocket, buyers may find some relief when they look toward new construction. Since builders often partner with lenders, they can sometimes offer lower interest rates on mortgages. They are also typically open to negotiation, offering discounts that bring the price of new homes lower than houses built in the past.
Why new homes may be a better option than existing ones
Many homeowners have fixed mortgage rates that are lower than the current rates. This deters them from putting their house on the market, contributing to the already low availability of housing options. With high prices for existing homes and not many of them to choose from, new construction might be the best bet for buyers. "Fortunately, builders are trying to pick up the slack, with new-home sales up and nearly back to pre-pandemic highs," Hale said (via Realtor.com). "So home shoppers frustrated by the lack of options might consider looking at new homes rather than existing homes."
While builders often lower the prices of their homes to bring in buyers, these discounts are beginning to slow down. According to USA Today, 30% of builders lowered their prices in April, but only 27% did in May, and the typical discount has been at 6% for the last several months. If you're in the market for a home, looking at new construction and acting fast could help you acquire a better deal.