While the sale prices for new homes dropped 1.5% year-over-year, Redfin reports that new home sales spiked 5.6%—the second consecutive quarter of increases.
Home-sale prices fell to a new average of $370,000 for Q3 2019—the biggest price decline since 2012 and the third consecutive quarter of declines.
The new-home supply fell 7.9% annually, which is also the most significant inventory drop since 2012, and the second straight quarter of declines.
Prices for existing homes rose 4.2% from 2018, while sales increased by 2.1%. The supply of existing homes fell by 6.9%.
Redfin stats the 10% year-over-year rise in residential building permits could signal the start of a “moderate recovery” for the new-home market.
"Buyers are returning to the new-home market thanks to low mortgage rates and relatively low prices," said Redfin Chief Economist Daryl Fairweather. "And builders, also taking advantage of low-interest rates to fund projects, are paying attention to preferences for affordability, which has led to more sales. Residential construction was a bright spot in the economy in the third quarter, a sign that builders are working to fill an inventory gap. As we head into the new year, I expect more new-home listings to hit the market, which should help sustain the relatively high level of sales."
Freddie Mac revealed the average 30-year fixed-rate mortgage rose to 3.75% from last week’s 3.69%.
“The modest uptick in mortgage rates over the last two months reflects declining recession fears and a more sanguine outlook for the global economy,” said Sam Khater, Freddie Mac’s Chief Economist. “Due to the improved economic outlook, purchase mortgage applications rose fifteen percent over the same week a year ago, the second-highest weekly increase in the last two years. Given the important role residential real estate plays in the economy, the steady improvement of the housing market is a reassuring sign that the economy is on solid ground heading into next year.”