Shift in Pricing Puts New Builds Within Reach

CHICAGO — Home buyers who have long been priced out of the new-home market may want to take a fresh look. The gap between the price of a brand-new home and an existing one has narrowed significantly – an “unprecedented change,” says Ali Wolf, chief economist for NewHomeSource and the new-home data firm Zonda.

This rare pricing alignment may present an opportunity for real estate agents and buyers to navigate a tough affordability environment. Historically, new homes have carried a premium, thanks to modern finishes, updated layouts and newer materials. But today, that premium may be all but vanishing as builders increasingly tout incentives like price cuts, mortgage rate buydowns and upgrade packages to attract buyers.

Wolf underscores the importance of this shift: “The data show that this is a unique period of time. You do not historically see new home prices and existing home prices that are about the same.”

Traditionally, new home prices have been “dramatically more expensive than existing homes – sometimes to the tune of 20%, 30%, 40% more,” Wolf says.

In April 2025, the median sales price of a new home in the U.S. was $407,200, according to a report from the U.S. Department of Housing and Urban Development and the Census Bureau. On the other hand, the median price of an existing-home sold in that same month was $414,000 – about $7,000 more.

Buyers facing affordability hurdles may be quick to dismiss new homes as too expensive – but that’s no longer the case, Wolf says. In some areas, new homes are even cheaper. In Raleigh, N.C., for example, new home prices are 2% lower than existing homes. “This is unheard of, very unusual,” she adds.

That message is beginning to resonate with buyers, says Erica Wolfe, the lead agent and owner of the Wolfe Team in Jupiter, Fla. More of her clients are now considering new-home construction – and they are particularly drawn to the potential for mortgage-rate buydowns and design upgrades like new decks or high-end finishes.

Meanwhile, an ongoing shortage of existing homes has contributed to price increases in the resale market, with some areas still seeing double-digit growth over the last year alone, according to data from the National Association of Realtors®.

Builders react to affordability pressures

“To help address affordability concerns and bring hesitant buyers off the fence, a growing number of builders are moving to cut prices,” says Buddy Hughes, chairman of the National Association of Home Builders.

In June, more than one-third – or 37% – of builders reported reducing their home prices, the highest share on record dating back to 2022, according to the latest NAHB and Wells Fargo Housing Market Index. The average price cut was 5%. At the same time, 62% of builders said they offered sales incentives like cash toward closing costs, upgraded interiors and interest rate buydowns.

That means home buyers exploring new-home communities may hear more pitches like, “Hey, if you like the house … I can give you an incentive too, like funds toward closing costs,” Wolf says. “From a consumer perspective, that’s an extra layer of savings.”

Mortgage rate buydowns become key selling points

High mortgage rates – hovering in the high 6% to 7% range – have weighed heavily on the resale market, blamed for curtailing existing home sales this spring while new-home sales rose.

Builders have been offering a compelling solution: “Builders are over in the corner raising their hand and saying, ‘We’re an option because we can give you a mortgage-rate buydown,’” Wolf says. These buydowns can reduce the interest rate on a 30-year fixed-rate mortgage to possibly around 5% – a significant improvement over current averages and possibly a big help for affordability.

Real estate pro Erica Wolfe has seen it firsthand in her market. “I’ve seen some [builders offer] as low as 4.5% or 5% where the normal market [is at a] higher 6,” she says. “Buying down those mortgage rates – that’s huge for buyers right now ... Then, builders are also offering upgrade incentives and closing costs incentives. It makes buying more affordable.”

‘Quick move-in’ homes offer speed – and savings

For buyers eager to move quickly, builders are increasingly marketing “quick move-in” or spec homes, too.

“These are homes that can be moved into within 90 days,” Wolf says. Buyers can avoid the six- to nine-month wait for a traditional build as well as the stress of navigating design selections – two common complaints with new construction. These homes “will look most similar to a resale home because they’re already under construction,” she says.

The cost to builders

The incentives lately aren’t without cost to the building industry. “It’s definitely hurting the builders,” Wolf says. “This is eroding their margin. It’s making the cost of doing business higher… But builders are also trying to explore what else they can do to help solve affordability.”

That includes building smaller homes, eyeing construction farther from city centers and offering more affordable attached housing, like townhomes. “There are a lot of builders going back to their architects and asking what they can do to still provide a nice home but… hit a lower price point,” she says.

Making the numbers work

With modern features, energy efficiency and builder incentives on the table, new homes are attracting buyers who previously may have dismissed them. Some real estate agents are seeing the opportunity to add a new-home niche to their business to meet the growing demand.

“If you are a home buyer and you’re frustrated with the options in the existing home market … maybe it’s a bit dated, needs a little work and it’s expensive, why not look at a new home?” Wolf says. “It’s probably going to be a similar price, but it’s also going to be brand new. It’s going to have nice finishes and some tech enablement already in it.”

And with more builders offering discounts, the home may come at a discount, too.

© 2025 National Association of Realtors® (NAR)