New research finds that prices were cut at least once, and in some cases significantly, on newly built homes in nearly all major U.S. metros in 2018.
About 25.1 percent of new construction homes' list prices were cut in the fourth quarter of 2018 at least one time, up 5.9 percent from the first quarter of that year. In November 2018, all for-sale listings, new and existing, had a price cut, according to Zillow's data. The cuts are attributed to rising home values, mortgage rates, and supply growth of for-sale properties at the end of the year, boosted by new construction.
Price cuts in general did become more common in 2018, especially at the high end of the market. Many newly constructed homes are listed in these pricier segments, in large part because of market dynamics including high and rising building costs.
Of the nation’s 35 largest markets, the share of newly constructed homes experiencing a price cut increased the most in pricey tech hubs. In San Francisco, 37.2 percent of newly constructed homes on the market experienced at least one price cut in the last quarter of 2018, compared to 12.2 percent in the year’s first quarter — a 25-percentage point increase over the year. Las Vegas also saw a sharp increase, with the share of new construction with a price cut spiking from 8.1 percent in the first three months of 2018 to 27.3 percent in the last three months.