New-home prices leveling out as builders adjust expectations

For more than a year, Steven Horwitz looked at new homes and resales in southern Palm Beach County but couldn't find the right combination of value and location.

Then last summer, Horwitz hit the lottery. GL Homes pulled his name out of a Bingo tumbler, putting him at the front of the line to buy a four-bedroom home at the Tuscany development near Delray Beach. He agreed to pay $374,900; eight months later, the same house sells for $414,900, or 11 percent more.

"Even though it's gone up a little, it's still an unbelievable price," said Horwitz, a 31-year-old dentist. "At the time, I was still a little bit unsure about buying, but when my name was picked, I felt like it was meant to be."

Tuscany's double-digit price increases are higher than those at most other new projects in South Florida, analysts say. While new home values are still rising, builders across the region are adjusting their expectations as the housing market slows.

"I think we're seeing a plateauing of prices in certain areas, especially on the higher end," said David Cobb, regional director of the Metrostudy research firm.

Investor frenzy from 2011 to 2013 helped push prices of all homes higher. Median prices on resales climbed by more than 20 percent year a year in some areas before retreating. Last year, builders in Palm Beach, Broward and Miami-Dade counties raised prices by an average of 6 percent about half of the increase of 2013, Metrostudy said.

"In '07 and '08, prices were pushed way down, and then we saw a quick pop back up, but now we're back to what I would consider a more normal market," said Jim Carr, president of CC Devco, the builder of Monterra in Cooper City and other projects in Broward and Palm Beach counties.

"We're definitely hitting some resistance [from buyers]," said Ray Puzzitiello, a West Palm Beach custom builder and president-elect of the Florida Home Builders Association. "But our costs are going up, too, and it's not like those are flexible. Some buyers understand it, but some don't want to hear about it."

Buyers at Tuscany are paying 10 percent to 13 percent more than those who initially bought when sales launched in July. But the price increases don't appear to be quashing demand at the 455-home development just east of Florida's Turnpike on Atlantic Avenue.

Prices range from $344,900 to $429,900, and six models opened last weekend. Sunrise-based GL Homes says it has sold 180 homes so far.

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New-home prices leveling out as builders adjust expectations