US New Home Prices Drop 15% from Peak as Builders Slash Costs to Move Inventory

The median contract price of new single-family homes fell to $387,400 in March, the lowest since July 2021, down 6.2% year-over-year and 15% from the peak, according to Census Bureau data. The three-month average dropped to $403,100, the lowest since September 2021. Builders are using mortgage-rate buydowns and other incentives not reflected in these prices. Lennar reported an average price per home of $374,000 in Q1, down 24% from its Q2 2022 peak, with gross margins plunging to 15.2% from 26.9%. Sales rose 1.6% year-over-year to 64,000 homes in March, with 64% occurring in the South. Inventory of completed homes fell to 119,000 but remains 54% above March 2019 levels. Under-construction inventory sits at 243,000, with total inventory at all stages at 475,000, up 45% from March 2019. The South accounts for 61% of total inventory, up 60% from 2019. In the West, inventory declined 11% year-over-year but is still 19% above 2019. Midwest inventory jumped 10% year-over-year, up 40% from 2019. Northeast inventory was flat year-over-year but up 7% from 2019.