New Construction vs. Existing Homes: Price Gap Narrows to Record Low

The price difference between new and existing homes has shrunk to its smallest margin on record, making new construction a more viable option for many buyers. According to a Q2 2025 report, the median listing price for a new home is $450,797, only 7.8% higher than the median price for an existing home, which is $418,300. In some regions, new builds are actually cheaper per square foot, signaling a significant market shift driven by builder incentives and increased inventory in specific areas.

Why is the new construction premium shrinking?

The primary reason for the narrowing price gap is a combination of steady new-home prices and rising existing-home values. While the median price for a newly built home held relatively steady, the median price for an existing home increased by 2.4% over the past year. This trend is amplified in markets with a high supply of new homes, particularly in the South and West, where builders are adjusting prices in response to cooler buyer demand. The national housing shortage, estimated at nearly 4 million units, continues to put upward pressure on prices overall, but builders are actively working to deliver more affordable options.

Are new homes cheaper per square foot?

On a national level, yes. The data reveals that new construction lists for a median of $218.66 per square foot, which is lower than the median of $226.56 per square foot for existing homes. This is a notable reversal from historical trends. However, this affordability advantage is not uniform across the country. It is most pronounced in regions where new construction makes up a larger share of the available housing inventory, leading to more competitive pricing.

The following table illustrates the price per square foot comparison:

Which markets are seeing the biggest price changes for new homes?

The most significant price adjustments are highly regional. Based on the report, the steepest annual declines in median list prices for new construction occurred in the following metros:

• Little Rock, AR (-15.6%)
• Austin, TX (-8.5%)
• Wichita, KS (-7.9%)
• Jacksonville, FL (-7.8%)
• Cape Coral, FL (-7.4%)

These declines are attributed to a combination of factors, including builder efforts to offer more affordable options, increased competition from existing homes, and a moderation of buyer demand. Conversely, prices are rising fastest in markets like Syracuse, NY, and St. Louis, where inventory remains constrained.

How has new construction inventory changed?

New-construction inventory has expanded dramatically, increasing by 37.3% since the first quarter of 2020. This growth significantly outpaces the 15.4% increase in existing-home listings. The South leads the nation in housing supply, accounting for more than half of all new-home listings. This increased supply in specific regions is a key factor creating more favorable conditions for buyers.

In conclusion, the current market presents a unique opportunity for buyers to consider new construction. The long-standing premium for a brand-new home has diminished to a record low. Key takeaways for buyers include:

• Evaluate homes on a price-per-square-foot basis, as new builds may offer better value.
• Focus your search on regions with high new-construction activity, like the South, where competition and prices may be more favorable.
• Understand that market conditions are local; while some areas see price drops, others are experiencing increases.

Based on our experience assessment, this data suggests that for the first time in years, buyers may find that a new-construction home is not only more readily available but also a competitively priced alternative to the existing-home market.