Do you want a lower mortgage rate or even better home prices? Both could be found in one location: a recently constructed house. In the current market, new construction might be your best chance, even though many buyers are ignoring it. Here’s why.
Compared to even a few months ago, there are now more brand-new homes available. About one in five of the homes for sale today are new construction, according to the most recent data from the National Association of Realtors (NAR) and the Census. Therefore, you’re losing out on a significant amount of the available homes if you’re not looking at recently constructed homes.
Additionally, builders are encouraged to sell their existing inventory as more new homes hit the market. Many are therefore making efforts to attract purchasers.
Builders Are Cutting Prices
As stated by National Association of Home Builders (NAHB) Chairman Buddy Hughes:
In the past month, nearly 40% of home builders have lowered their sales prices.
In other words, builders are adapting to what buyers can afford and being realistic about the current market. They use it to maintain the flow of their inventory.
Therefore, if you purchase a newly constructed home, your money may go farther because builders might be more willing to haggle over the price than you might anticipate. To find out what’s available and what incentives builders in your area are offering, rely on your agent.
Builders Are Offering Lower Mortgage Rates
The majority of people are unaware of this. At the moment, mortgage rates for new home buyers are frequently lower than those for existing home buyers.
This is due to the fact that many builders are also providing rate buydowns in order to improve the appeal of their homes and maintain sales. In essence, they are prepared to contribute to a reduction in your interest rate in order to increase your chances of purchasing one of their residences.
According to data from Realtor.com, buyers of newly constructed homes in 2023 and 2024 had mortgage rates that were about 0.5 percent lower than those of buyers of pre-existing homes (see graph below):
Saving that much money adds up and has a significant impact on your monthly budget.
Therefore, it’s time to expand your search to include newly constructed homes if you haven’t already found something you adore. It’s possible that what you’ve been searching for already exists, albeit in a different neighborhood.
Bottom Line
These options are a bright spot in the current housing market because they give you more options, allow you to haggle over the price, and possibly even result in better mortgage rates.