At more than $800,000, the backyard unit on Alonzo Avenue in Ballard initially gave Lavanna Martin sticker shock, but she and her husband are buying the home anyway this month.
The couple is moving from Austin, Texas, to Seattle to be close to their daughter and baby grandchild. If they tried to buy an existing home in Seattle at the same price, Martin said, they likely would have wound up with “a dilapidated shack.”
In shopping for a newly built place, their plans came together more smoothly. They had no serious competition for the unit, and the builder agreed to knock off $22,500 from the price.
In the tight Seattle-area housing market, buyers who can afford pricey new homes have some advantages, like fewer bids and more choices, including smaller attached or detached units. Home shoppers, like Martin, are also seeing incentives from builders trying to make up for still-high interest rates.
“It’s getting closer to a buyer-leaning market,” said Randy Ginn, a real estate broker who represents builders on the Eastside for Windermere’s Northwest Builders Group.
“I don’t know if every builder is giving concessions, but I would argue that probably a lot of builders are giving concessions,” Ginn said. “That could be a combination of a little bit of price reduction, it could be a credit to buy down interest rates to make it more affordable for a period of time.”
It is difficult to measure trends in the Seattle area’s new-home market with precision. Builders often sell homes directly to buyers, and those sales aren’t tracked by the Northwest Multiple Listing Service.
But the NWMLS tracked some 6,641 newly constructed homes, including single-family houses and condos, sold last year in King, Snohomish and Pierce counties.
These statistics show the market for new homes perked up, though the number of sales is well below the level in 2021, when 9,227 new single-family homes and condos were sold on the NWMLS in the three counties. New-home sales increased last year in King and Snohomish counties compared with 2023 but declined in Pierce County.
Prices for new homes tracked by the NWMLS increased last year. In 2024, the median sale price of a new home in King County, including single-family and condos, was $920,450. In Snohomish and Pierce counties, it was $830,320 and $650,000, respectively.
The new-home prices were higher than the median prices of all homes sold on the NWMLS. The median home price was $850,979 in King County. In Snohomish and Pierce, it was $750,000 and $554,590 respectively.
Trevor Johnson, CEO of Blackwood Homes, said the past 2½ years have been “really challenging” for builders. Demand for new homes across the Puget Sound has been down for “pretty much all sites of ours and developers that we know in most areas.”
“Sometimes you get a good project, and it sells quick, but that’s been pretty unusual the last almost three years.”
Building smaller
Seattle’s drive to encourage higher density development is working to bring buyers more choices. Builders are producing smaller, more affordable homes on single-family lots. New town homes are also widely available.
“There’s a lot of town homes on the market and the higher-quality ones are selling,” said Marc Mignogna, a Re/Max Metro Realty sellers’ agent for new homes in Seattle and Shoreline.
“The ones in prime locations are selling, and I just think buyers have more choices,” he said.
“So, let’s say if you go to Ballard, for instance, if you don’t like something on this block, you can probably find one two blocks over and another one two blocks over and etc.”
But many home shoppers also want more than a vertical box, Mignogna said, describing typical attached units that are tall and narrow and share a wall with the main house.
Home shoppers look for “unique features,” such as large windows for natural light. Many won’t view town homes, preferring detached units that resemble a small single-family home.
“If you can carve out some yard space and you can provide a garage, those two things right there will set you apart from the competition,” Mignogna said.
That’s what Martin said she and her husband were looking for when they settled on the two-bedroom, two-story, 1,089-square-foot detached accessory dwelling unit in Ballard. The unit has a little space in the bricked backyard; inside it has engineered hardwood floors and “not a speck of dirt.”
“It is cute,” she said. But most of all they liked that the unit is detached; there won’t be any neighbors on the other side of a wall like with apartments, condos and town homes.
“We read books, we’re quiet people,” Martin said. “We just didn’t want to be attached to a wall.”
High prices
New homes of all types tend to be pricey. A new home will typically be more expensive than a comparable existing home on the market. The higher prices are one reason that some new properties are not drawing multiple bids, Ginn said.
The most important difference “is that builders are businesspeople, so they’re pushing prices up as much as they can all the time,” Ginn said.
Sellers of existing homes, by contrast, may be motivated to sell by a job change or life circumstance, and the home can be underpriced when it hits the market. Ginn said there is, generally, still strong demand for new homes of all types and believes, on average, most new homes are selling within 60 days or less.
“Properties generally don’t sit unless they’re really overpriced,” Ginn said.
The new-home market, however, typically draws people who are upgrading or downsizing their homes, but many of these buyers have been on the sidelines waiting for mortgage rates to decrease.
Mortgage rates hit a high in late October 2023 at 7.79% and have been in the 6.5%-7% range for the past year, according to Freddie Mac. In the week ending March 27, the average rate on a 30-year mortgage was 6.65%, slightly lower than the same week a year ago.
Keith Akada, a Seattle mortgage broker with Fairway Independent Mortgage, said builders often resist dropping the price of a new home, particularly when several properties are for sale in the same development.
Instead of a price cut, some builders have been offering help with closing costs or buying down the rate — in other words, paying the buyer’s mortgage company to lower the interest payment for a certain period. Such incentives can shave $50,000 off the price of a $750,000 home, Akada said. Builders typically offer these incentives after the property sits for 45 or more days.
“It allows them to offer deep incentives, but it keeps their pricing integrity at that list price so that the other units, they still have a chance of selling at the same prices,” Akada said.
New single-family homes in expensive neighborhoods of Seattle, Bellevue and Kirkland are out of reach for many buyers. In Bellevue, for example, the price tag can be $3 million to $4 million for a large single-family home, Ginn said.
The high cost of new homes reflects the escalating construction costs, particularly the price of land, said Kim Sharpe Jones, director of builder services for Matrix Real Estate, a brokerage focused on new homes.
“The main issue with the new-home market right now is the lack of land inventory,” Jones said. “The lack of available land to develop is driving up costs for everything because there’s a lot of competition when there is land available.”
The volatility in the stock market and the possible resumption of tariffs on lumber and other building materials have created uncertainty.
“We’re starting to hear that consumer confidence is waning because of the stock market and other things obviously,” she said.
Current market conditions mean that new-home projects need to solidly “pencil out” a profit to obtain construction financing.
“In the last couple of years, there’s a number of deals we’ve lost hundreds of thousands of dollars on,” said Johnson, with Blackwood Homes. “So, it’s not like we’re always making a profit.”
The conditions have also caused subtle shifts in the types of homes that are being built in the Seattle-area’s expensive markets.
Town homes, Johnson said, are no longer as profitable to develop in Seattle and builders are preferring three-unit developments on single-family lots.
Seattle-area cities have been revising their comprehensive plans to comply with new state laws that require them to allow higher-density residential development. Johnson predicted that Seattle will see projects that pack four to six units on a residential lot once the rules are finalized by the city later this year.
Ginn predicted the Eastside will likely go the way of Seattle with higher-density developments, particularly along the light rail route.
“They’re dense, they’re small, they’re tall, they live vertical,” Ginn said. “The Eastside isn’t quite ready for that, but we’re very close with the advent of the train.”
He doubted, though, that future buyers of new homes anywhere up the Interstate 405 corridor would get much price relief.
“Prices will keep going up and the cost to build these houses are going to go up and land is going up,” Ginn said. “The only thing they might do is get smaller, which I guess means they’re less expensive, but then you’re also buying less home.”