SEATTLE, Jan. 17, 2019 /PRNewswire/ -- Home shoppers may
be able to find a better deal on a new construction home than they could a year ago. A new Zillow® analysis finds that price cuts were more common in the fourth quarter of 2018 than in
the first quarter.
Across the country, 25.1 percent of new construction homes had a price cut in the fourth quarter, compared with 19.2 percent
of new homes in the first quarter of the year. This mirrors a trend seen in the overall housing market, with price cuts becoming more common.
Eleven percent of buyers last year bought a new construction home, according to the 2018 Zillow Group Consumer Housing Trends Report. For many of them, everything being new was a top reason for
buying a new construction home instead of an existing home. More than a third of new construction buyers also felt it represented
the best value for their money – and they might be getting even more value now.
Buyers were most likely to find a price reduction in Denver, where 40.3 percent of new
construction homes had a price cut in the fourth quarter of the year. At the beginning of the year, just 21.3 percent of newly
built homes had a price cut. In Austin, price cuts were less frequent at the end of the year
than they were at the beginning.
New homes in San Francisco and Los Angeles saw the biggest
price reductions in the fourth quarter, at 8.5 percent. However, these markets are also two of the most expensive for new
construction homes. The typical new home with a price cut in Los Angeles cost $2 million even after its price dropped.
"More newly built homes are seeing their list prices drop, but the size of those price cuts has been remarkably steady which
suggests that the trend we are seeing is being driven more by price discovery than by desperate sellers," said Zillow Senior
Economist Aaron Terrazas. "The housing market cooled in late 2018, particularly at higher price
points and in pricier communities where new construction has clustered in recent years. Facing high and rising construction
costs, builders have few options but to target upmarket while homebuyers are increasingly squeezed by tight affordability and
rising interest rates. But the trend could be short-lived. New home building inched upward for most of the past few years, but
about a year ago permitting activity began to pull back. With fewer new homes in the pipeline, these price cuts may prove to be a
fleeting phenomenon."
New construction homes are often more expensive than existing homes, and the upper price range of homes has seen more of a
slowdown than the more affordable sector of the market, as demand for affordable housing keeps pressure on prices. Home value
appreciation for homes in the most expensive third of the market is growing at about half the pace of the most affordable third
of the market. Higher-valued homes were also more likely to have a price cut than the most affordable homes, according to
previous Zillow research.
|
Q1 2018
|
Q4 2018
|
|
MSA
|
Share
with
Price
Cut
|
Median
Price After
Reduction
|
Size of
Reduction
|
Share
with
Price
Cut
|
Median
Price After
Reduction
|
Size of
Reduction
|
|
United States
|
19.2%
|
$375,000
|
-4.8%
|
25.1%
|
$ 389,900
|
-2.6%
|
|
New York, NY
|
16.7%
|
$872,200
|
-3.0%
|
22.3%
|
$ 739,000
|
-4.0%
|
|
Los Angeles-Long Beach-Anaheim, CA
|
19.5%
|
$2,348,000
|
-5.9%
|
25.9%
|
$2,000,000
|
-8.5%
|
|
Chicago, IL
|
17.1%
|
$520,000
|
-4.6%
|
21.3%
|
$ 399,000
|
-0.2%
|
|
Dallas-Fort Worth, TX
|
22.4%
|
$489,000
|
-3.5%
|
34.4%
|
$ 417,200
|
-4.3%
|
|
Philadelphia, PA
|
16.6%
|
$420,000
|
-5.6%
|
25.5%
|
$ 429,000
|
-3.6%
|
|
Houston, TX
|
20.9%
|
$408,900
|
-6.7%
|
27.8%
|
$ 375,000
|
-4.1%
|
|
Washington, DC
|
16.4%
|
$540,100
|
-5.0%
|
22.6%
|
$ 524,900
|
-2.4%
|
|
Miami-Fort Lauderdale, FL
|
22.8%
|
$389,000
|
-6.2%
|
25.6%
|
$ 399,000
|
-5.0%
|
|
Atlanta, GA
|
18.5%
|
$314,900
|
-3.6%
|
21.6%
|
$ 359,000
|
-2.9%
|
|
Boston, MA
|
11.6%
|
$854,500
|
-3.7%
|
17.5%
|
$ 709,900
|
-6.2%
|
|
San Francisco, CA
|
12.2%
|
$960,000
|
-1.5%
|
37.2%
|
$ 997,400
|
-8.5%
|
|
Detroit, MI
|
10.7%
|
$384,400
|
-5.1%
|
20.1%
|
$ 402,200
|
-0.7%
|
|
Riverside, CA
|
27.2%
|
$443,300
|
-0.8%
|
28.0%
|
$ 451,500
|
-2.2%
|
|
Phoenix, AZ
|
24.8%
|
$353,000
|
-3.7%
|
26.3%
|
$ 332,900
|
-2.1%
|
|
Seattle, WA
|
11.9%
|
$695,000
|
-19.7%
|
31.8%
|
$ 665,000
|
-1.1%
|
|
Minneapolis-St Paul, MN
|
14.3%
|
$509,900
|
-3.2%
|
30.0%
|
$ 440,000
|
-2.2%
|
|
San Diego, CA
|
21.9%
|
$855,000
|
-12.8%
|
26.9%
|
$1,248,600
|
-8.2%
|
|
St. Louis, MO
|
N/A
|
N/A
|
N/A
|
33.2%
|
$ 282,500
|
-3.3%
|
|
Tampa, FL
|
27.1%
|
$329,900
|
-2.3%
|
32.3%
|
$ 289,900
|
-3.3%
|
|
Baltimore, MD
|
16.2%
|
$467,500
|
-7.5%
|
23.3%
|
$ 440,000
|
-4.3%
|
|
Denver, CO
|
21.3%
|
$569,900
|
-1.7%
|
40.3%
|
$ 540,000
|
-3.2%
|
|
Pittsburgh, PA
|
17.6%
|
$237,500
|
-5.8%
|
15.7%
|
$ 365,000
|
-3.9%
|
|
Portland, OR
|
15.9%
|
$717,400
|
-8.0%
|
20.4%
|
$ 480,700
|
-3.8%
|
|
Charlotte, NC
|
22.1%
|
$429,900
|
-3.5%
|
28.6%
|
$ 400,000
|
-4.0%
|
|
Sacramento, CA
|
7.0%
|
$748,500
|
-2.1%
|
27.4%
|
$ 528,200
|
-1.1%
|
|
San Antonio, TX
|
N/A
|
N/A
|
N/A
|
24.0%
|
$ 334,900
|
-1.5%
|
|
Orlando, FL
|
19.3%
|
$355,600
|
-3.5%
|
21.1%
|
$ 348,400
|
-4.3%
|
|
Cincinnati, OH
|
N/A
|
N/A
|
N/A
|
17.4%
|
$ 355,000
|
-3.1%
|
|
Cleveland, OH
|
6.8%
|
$298,800
|
-0.1%
|
10.0%
|
$ 440,900
|
-1.0%
|
|
Kansas City, MO
|
7.8%
|
$330,000
|
-1.5%
|
18.6%
|
$ 345,000
|
-4.3%
|
|
Las Vegas, NV
|
8.1%
|
$503,600
|
-3.1%
|
27.3%
|
$ 478,000
|
-0.9%
|
|
Columbus, OH
|
25.5%
|
$524,900
|
-1.2%
|
28.3%
|
$ 499,900
|
-3.0%
|
|
Indianapolis, IN
|
22.7%
|
$414,500
|
-1.0%
|
35.3%
|
$ 370,000
|
-6.3%
|
|
Austin, TX
|
26.8%
|
$358,600
|
-2.3%
|
23.7%
|
$ 363,500
|
-3.0%
|
Zillow
Zillow is the leading real estate and rental marketplace dedicated to empowering consumers with data, inspiration and
knowledge around the place they call home, and connecting them with great real estate professionals. In addition, Zillow operates
an industry-leading economics and analytics bureau led by Zillow Group's Chief Economist Dr. Svenja
Gudell. Dr. Gudell and her team of economists and data analysts produce extensive housing data and research covering more
than 450 markets at Zillow Real Estate Research. Zillow also sponsors the quarterly Zillow Home Price Expectations Survey, which
asks more than 100 leading economists, real estate experts and investment and market strategists to predict the path of the
Zillow Home Value Index over the next five years. Launched in 2006, Zillow is owned and operated by Zillow Group, Inc. (NASDAQ:Z
and ZG), and headquartered in Seattle.
Zillow is a registered trademark of Zillow, Inc.
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SOURCE Zillow