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New Homes in a Few Small Markets See a Drop in Demand

In a couple areas, builders that broke ground on new homes earmarked for city-fleeing residents are seeing a drop in demand and cutting prices.

NEW YORK – In certain parts of the United States, builders who couldn’t put up homes fast enough now have inventory sitting, creating a local buyer’s market.

It’s a small trend, at least so far, but particularly pronounced in regions away from major urban hubs, where buyers were looking for affordability and picturesque havens during the pandemic.

Demand has ebbed as people discover more reasons to stay put, notably companies pushing employees back to work and schools reopening.

Nationwide, home-price appreciation decelerated for a second straight month in September as part of a modest cool down, according to Zillow Group. Rick Palacios at the John Burns real estate consultancy said the pullback signals prices overtaking what locals can afford, and ATTOM reported that 75% of U.S. counties had median-priced single-family homes that were less affordable than historic averages in the third quarter – the highest share in 13 years.

“You’re transitioning from every market under the sun going nuts to now starting to see where long-term fundamentals actually matter,” Palacios says.

Although the boom remains strong in many Sun Belt destinations like Phoenix and Austin, Charles Rutenberg Realty’s Gerard Buglione said sellers in Pasco County, Florida, no longer dictate terms.

“A lot of buyers have gotten frustrated and put purchasing on the back burner,"” he notes. “Prices are leveling out.”

Source: Bloomberg Wealth (10/22/2021) Gopal, Prashant

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