New homes closer in price to existing listings as buyers look for better value

The affordability gap between purchases Newly built homes Existing homes fell in the third quarter as builders looked to capitalize on the rise in demand through incentives.

The price per square foot of a new construction home is lower than that of an existing home in the South and West in particular, according to Realtor.com’s third quarter report on new construction.

Both the South and West have a greater supply of new and higher construction Price reductionswhile the Northeast and Midwest have fewer new construction homes listed with more modest price reductions.

“Builders have a significant amount of spec inventory that they’re trying to move now as the market slows seasonally and in terms of price and sales growth,” said Joel Berner, chief economist at Realtor.com. “Fast transit inventory is readily available, and builders are discounting prices and offering incentives to sell it.”

Home listings featuring water-efficient fixtures are up nearly 290% with buyers prioritizing water conservation

The report found that housing stock in the South and West has mostly returned to pre-pandemic levels due to builders delivering new construction, while newly built homes enjoy a single-digit price premium and all homes have higher rates of price declines than other regions.

In contrast, new construction is considered expensive in the Northeast Midwestand those areas had some of the hottest and most seller-friendly housing markets in the country.

Trump’s 50-year mortgage proposal: What does it mean for homebuyers?

Historically, buyers of new homes have had larger down payments than they do for existing homes, although this dynamic has changed. (Mario Tama/Getty Images)

The mediator Price per square foot For new construction it was $200 in the South and $292 in the West, while it was $353 in the Northeast and $227 in the Midwest, according to a Realtor.com analysis. For existing homes, those numbers were $204 in the South, $320 in the West, $271 in the Northeast, and $168 in the Midwest.

“Now, new construction is price competitive with existing homes, and actually more affordable on a per-square-foot basis,” Berner said. “In a market where affordability is the biggest concern, new homes are priced to sell, and they offer attractive financing that takes the burden out of the two most difficult parts of purchasing a home: the down payment and the monthly payment.”

The report found that price reductions reached an all-time high for newly built homes, with 15.1% of listings reducing their prices in the third quarter of 2025. These reductions are less common in areas with more Restricted housing markets.

These 10 states offer the largest property tax savings for American homeowners

Incentives such as buy-downs and below-market mortgage rates are becoming more popular for buyers of new construction homes. (Istock)

In the South and West, where there is more supply, price reductions are more common, with prices falling for 16.6% of new builds in the West and 15.9% of new builds in the South. In the Northeast, prices were reduced in only 7.8% of new construction, and only 12.2% in the Midwest, according to the report.

A recent Realtor.com study found just that Mortgage rate Below-market buyouts and mortgage rates are a popular promotion to attract buyers to new construction due to higher mortgage rates.

In the third quarter of 2025, the report showed that the average 30-year mortgage rate on an existing home buyer’s deed was 6.26% – while the average 30-year interest rate for new home buyers was 5.27%. The 99 basis point decline in mortgage rates for new homebuyers in the third quarter represents a jump from the previous two quarters, which were 51 and 54 basis points, respectively.

Get FOX Business on the go by clicking here

Down payments on new home purchases are also decreasing, although buyers of new construction have historically made larger down payments than those purchasing existing homes.

In the latest quarter, new home buyers paid 15.7% of the purchase price while existing home buyers paid 17.8%. For comparison, in the third quarter of 2022, new homebuyers were down 18.3%, while existing homebuyers were down 17.2%.