Housing News

New Home Sales Fall for Second Straight Month, but Money-Saving Opportunities Exist for Homebuyers

The total number of newly constructed homes sold fell sharply in May, marking the second straight month of declines. However, there is a silver lining for homebuyers.

As new home construction continues to rise, homebuyers may be able to strike a better deal with homebuilders that are eager to sell their suddenly increasing inventory. That could result in some savings for homebuyers.

Sales of newly built, single-family homes fell by 11.3% in May from April's totals, according to data released Wednesday by the Census Bureau and the Department of Housing and Urban Development. New home sales were also down 16.5% compared to May 2023.

The decline in sales in May and April comes as the total number of new homes for sale has risen to levels not seen in more than 15 years.

The inventory of new homes on the market has increased for five months in a row, ending May with the most homes for sale in any month since 2008.

Bright MLS Chief Economist Lisa Sturtevant suggests that the contrast between declining sales and rising inventory could prove advantageous for buyers. The multiple listing service covers the mid-Atlantic region.

Some builders are trying to blunt the affordability challenges facing home shoppers by buying down mortgage rates for those purchasing new construction either temporarily or for the duration of a 30-year loan, contributing to closing costs, and offering upgrades.

"Mortgage rates near 7% and record high home prices in many markets have created affordability challenges for many would-be buyers," Sturtevant said in a statement. "Homebuilders had been enticing buyers with rate buydowns and other concessions. But for some homebuyers, those financial incentives are no longer enough to get them on the building lot."

According to the National Association of Home Builders, those price concessions were already happening. A recent report from the NAHB showed that nearly 30% of homebuilders cut their sales prices in June to boost sales.

Sturtevant noted that current market conditions put homebuyers in a strong position to make a good deal on a new home.

"Buyers that remain in the market are starting to have more leverage, and sellers of existing homes are increasingly offering concessions, including help with closing costs and money toward repairs," Sturtevant added. "These concessions are an advantage to homebuyers who can buy an existing home at a lower price than a new home."