New homes haven’t been this cheap since 2021. Buyers are starting to take notice.

After years of hot inflation, it’s hard to find much of anything for sale at 2021 prices. That is, unless you’re looking for a newly built home.

The median new construction home sold for $387,400 in March, the lowest level in nearly five years. Prices have fallen 6.2% in the last year, even as older homes are still slowly appreciating.

The price relief for new construction buyers comes as builders continue to adjust to the housing market’s affordability problem. Many are slashing prices to compete in high-supply markets in the Southeast and Mountain West, and building smaller homes with simpler finishes that are in reach for more budget-conscious buyers.

“We know that there’s pent-up demand for home buying, and I think that builders have the tools to be able to bring some of those buyers off the sidelines,” said Odeta Kushi, deputy chief economist at First American.

So far, those efforts seem to be working. New home sales reached a seasonally adjusted annual rate of 682,000 in March, up 3.3% from a year earlier. New homes that sold for between $300,000 and $400,000 make up the largest segment of the market, but in recent years, sales at the sub $300,000 level have been gaining steam. They now make up 18% of the market, up from 14% in 2023.

Brandon Archie, a Realtor in Maple Grove, Minn., has watched builders aggressively expand in the outer suburbs of Minneapolis-St. Paul in recent years, while inventory of older homes has lagged far below pre-pandemic levels. Purchasing an existing home usually takes patience and beating out multiple offers, which is why several of his clients relocating to the area have recently opted to buy new.

“If you take a $500,000 existing home, more than likely in our market, there are going to be multiple offers, which is going to drive that price up,” he said. “Buyers end up having to do things like either putting more money down or waving a home inspection — just anything to be competitive in that market.”

Buying new in the area, though, tends to be easier, especially if buyers are willing to consider an already completed home. Buying one can mean substantial savings, although it means buyers give up customizations. One client who recently purchased one of those homes received $15,000 off the list price, plus $5,000 for closing cost assistance or an interest rate buydown.

“It’s a pretty good mix of people choosing to go to new construction versus existing,” he said. “Once you get to a certain price point, kind of like that $500,000 price point, it almost becomes cheaper to buy new construction.”

Read more: Is now a good time to refinance your mortgage? 5 steps to follow when considering refinancing.

Typically, new construction homes sell for a premium over older homes. But in recent years, as builders have rapidly expanded while older home inventory has not, that premium has shrunk and, in some parts of the country, has disappeared altogether.

Places where builders have been particularly active, like Florida and Texas, see the biggest gaps. A new construction home in the Austin, Texas, area averaged about 6% cheaper than an older home in the first quarter of this year, according to Realtor.com. In the Florida Gulf Coast communities of Cape Coral and Sarasota, new construction sells for 13.5% and 7.7% less, respectively.

In San Antonio, prospective buyers have a number of builders to choose from, making price cuts, interest rate buydowns, and closing cost assistance common perks for buyers.

“I have seen a lot of these homes reduced pretty drastically in price,” said Brock Bremmer, a real estate agent there who does much of his business in new construction.

He’s also seen builders go smaller in an effort to keep prices lower. A few years ago, a new 1,600-square-foot home in the area usually had three bedrooms and two bathrooms. Now, many homes that size have a fourth bedroom, and a few builders offer two-bedroom homes with floor plans as small as 800 or 900 square feet.

While buyers have so far responded to lower prices and generous incentives, the new construction industry is far from immune to the risks that affect the broader housing market. Tough affordability conditions, along with higher mortgage rates and gas prices, are giving some buyers pause, and measures of homebuilder confidence remain low.

“I don’t think it’s time to organize the ticker tape parade yet,” said Allan Merrill, the CEO of Beazer Homes, a national homebuilder focused on energy efficiency. “But I think fundamentally, we don’t have enough homes in this country, and so when we get any alignment of confidence, a break in affordability, the surprises are likely to be to the upside in terms of demand.”

Claire Boston is a Senior Reporter for Yahoo Finance covering housing, mortgages, and home insurance.

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