The price of newly constructed homes in the Lawrence area is falling for the first time in years.

Numbers compiled by the Douglas County Appraiser’s Office show the average price of new homes in the county from January through August was down about 2 percent, to $184,760.

The price of newly constructed homes is falling, according to a two recent reports. Luke Middleton, a research economist at KU's Policy Research Institute, said his data indicated the average selling price for a new 2,400 square-foot home had fallen by 12 percent since April to 02,689. New houses are under construction at Stonecreek Court in west Lawrence.

Numbers compiled by Kansas University researchers show an even larger decline.

Luke Middleton, a research economist at KU’s Policy Research Institute, said his data indicated the average sale price of a new 2,400-square-foot home with three or four bedrooms and two baths had fallen by 12 percent since April, to $202,689.

Middleton, who compiles the numbers for a quarterly cost-of-living index report, admitted he was baffled by the findings. It’s only the second time since 1993 the average price has dropped by as much as 12 percent from one quarter to the next. The last time was in the second quarter of 1999.

The latest drop also is unusual in that it appears to be more than a statistical anomaly.

From January to April, the average price dropped by 4 percent, according to Middleton’s research. From October 2001 to January, the average price was nearly stagnant, increasing by 0.2 percent.

“These numbers are kind of surprising to me,” Middleton said. “I’m not sure why it is happening, but it has basically been a three-quarter (nine- month) trend, so it is more than a fluke. It may be a correction after Sept. 11, but I’m not sure that explains it. Nationwide, the trend has been for housing to do very well since Sept. 11.”

Lawrence builders and real estate professionals were puzzled by the decline.

“I haven’t seen any evidence of that in the market whatsoever,” said Gary Nuzum, managing broker with Coldwell Banker/McGrew Real Estate. “I have not heard one builder say that their costs are going down or that they can afford to lower the costs of the homes they are trying to sell.”

Bob Santee, president of the Lawrence Homebuilders Assn., agreed the cost to build a house in Lawrence wasn’t decreasing. He said it was possible the market had softened enough to bring the average sale price down slightly.

“It is a little bit more of a buyer’s market than it used to be,” said Santee, who also is president of Denning-Santee s. “You have to wait a little longer to make the sale, but sales are still happening. But I haven’t heard of builders discounting their prices to get rid of inventory.”

Cheri Drake, president of the Lawrence Board of Realtors and broker for TeamOne Real Estate, said she had noticed lower prices on some new homes. She attributed the decrease to slower sales in the spring and summer after Sept. 11 and the ensuing economic downturn.

“There probably has been more new construction on the market than there has been in the past,” Drake said. “Two years ago we had the same thing in the $300,000 to $350,000 market. Eventually the supply will get absorbed and they’ll start building again, but at a little bit slower pace.

“I don’t think it is anything to get concerned about. I think it is a natural cycle of the market.”

Drake said she wasn’t concerned about the numbers, mainly because she didn’t think they were indicative of the entire Lawrence real estate market.

She said people who already owned a home still should expect it to increase in value at a good rate.

Recent numbers from the County Appraiser’s Office seem to back that up. The numbers show the average sale price for all homes in Douglas County, both new and existing, has increased by about 7.7 percent, to $148,200, since 2001.

“I think the fact that our overall average is up shows that we still have a very healthy market,” Nuzum said.

Middleton said he suspected new home prices would not continue to slide.

“I think these numbers are right at the level where if they go down any further, there might be something going on that we need to take a look at,” Middleton said. “But I’m really skeptical that they’ll keep declining. The Lawrence housing market has been a pretty sure thing for quite a few years.”