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Buying a brand-new home with modern finishes, new appliances, a builder warranty and perhaps a community pool doesn’t sound like the most affordable way to become a homeowner.
But in many housing markets, the median newly built home now costs less than the median existing home.
Across the Austin metro area, production-built communities in suburban locations offer compact detached homes with shared amenities in the mid-$300,000s — well below the metro area’s $473,500 median listing price in June.
Austin is a leading example of how builders are responding to the housing affordability crunch. Rather than focusing on larger, higher-priced homes, many production builders are increasingly offering smaller, more attainable homes aimed at middle-class buyers priced out of more expensive neighborhoods. These homes typically range from roughly 1,200 to 2,000 square feet on smaller lots that help keep prices within reach.
“Some of this inventory is meant to be affordable. It’s meant to compete on price with existing homes,” Joel Berner, senior economist at Realtor.com, tells CNBC Make It.
Builders can offer lower prices for several reasons. They can buy less expensive land farther from urban centers, build smaller homes on smaller lots and offer incentives such as mortgage-rate buydowns, closing-cost credits and design upgrades.
Together, those advantages have erased much of the traditional premium for buying new — and in many markets, new homes now cost less than comparable existing homes.
Why the premium for buying new is shrinking
Historically, newly built homes in the U.S. have sold for about a 20% premium over existing homes, according to Robert Dietz, chief economist at the National Association of Home Builders. Over the past three years, that premium has largely disappeared as new-home prices flattened while existing-home prices continued to climb, according to NAHB data.
Part of the reason is that many potential sellers are unwilling to give up the low-rate mortgages they secured before borrowing costs surged in 2022, leaving fewer existing homes on the market. Existing-home sales remain about one-third below their early-2022 pace.
That reluctance to sell — known as the “lock-in effect” — has limited the supply of homes for sale. This has helped keep prices high, Dietz says.
“Joe Home Seller has more options than just selling this house. He can stay in it, he can rent it out,” says Berner. Builders, by contrast, are “pretty much looking to sell, and that’s it. They’ve got inventory that they need to move.”
A residential subdivision in Georgetown, Texas.Roschetzkyistockphoto | Getty
To compete for buyers, about two-thirds of builders now offer some form of sales incentive each month, including mortgage-rate buydowns, higher-end fixtures and finishes, and closing-cost assistance, Dietz says. About one-quarter are also cutting prices outright. Those concessions have come at the expense of builders’ profit margins but have also helped narrow the historic premium for buying new, he says.
Smaller homes are also becoming more common. Townhouses now account for nearly one in five new single-family homes — the highest share since NAHB began tracking the data in 1985.
In many markets, that value extends to price per square foot. New homes now sell for less per square foot than existing homes in Austin, Phoenix, Raleigh, Tampa, Orlando, Charlotte and Dallas. Nationally, new homes sell for about $202 per square foot, compared with $212 for existing homes, according to Zillow data from May 2026.
What today’s affordable new homes offer—and the tradeoffs
Where buyers are most likely to find a deal on new construction depends largely on the local market.
“I would say the best place to buy new construction is in the South, because that’s where the most new construction activity is, and that’s where the prices are the most competitive with resale,” Berner says.
He also points to pockets of the West, such as Boise and Fresno, where the premium for buying new has narrowed sharply. In much of the Midwest and Northeast, however, buyers have fewer affordable new-construction options, he says.
For many buyers, the purchase price is only part of the affordability equation.
“The real innovation — or the response to market conditions — is in the financing,” says Ari Rastegar, CEO and founder of Austin-based Rastegar Property Company. Builders are increasingly paying for permanent mortgage-rate buydowns that can lower buyers’ mortgage rates by about a percentage point — an incentive that’s difficult for most individual home sellers to replicate.
“Because of this, new construction frequently provides a lower monthly payment than a comparable resale home, even if the purchase price is similar or slightly higher,” says Ross Neuren, principal of The Speed & Neuren Group in Austin.
In Houston, broker Humberto Marquez says budget-conscious, first-time buyers are increasingly cross-shopping resale homes and new construction. The best deals on new homes, he says, are often found 35 to 50 minutes from downtown, where buyers accept a longer commute in exchange for a lower monthly payment and a 10-year structural warranty.
Orlando real estate agent Christina Rordam says the builder incentives and discounts available today are “some of the best” she’s seen in 21 years selling homes in the area. Those incentives often make new construction competitive with comparable resale homes, she says.
The tradeoffs, she says, are less distinctive homes and potentially lower resale value. Many of the communities offering the strongest deals are built by production builders, “providing a handful of floorplans, often on smaller parcels of land.” When owners eventually sell, “there are fewer ways for that home to stand out from the competition.”
And buyers who expect to sell within a few years may face competition from the builder if new homes are still being sold in the community, Rordam says. One of her clients recently delayed selling because the builder is still offering mortgage-rate buydowns and closing-cost assistance on nearby new homes, making it harder for a nearly new resale to compete.
New homes are less likely to compete on price with existing homes in dense urban markets like New York City, where scarce land means new construction is dominated by condominium projects rather than detached homes. Outright price discounts are much less common than incentives, according to Nikita Idiri, a broker at Coldwell Banker Warburg in New York. Developers are often “not willing to budge on the list price itself,” instead offering credits toward buyers’ closing costs or other purchase expenses worth “roughly a 3% to 5% discount” while preserving the recorded sale price, he says.
Timing matters, too. Idiri says the best opportunities often come during the early or late stages of a project’s sales cycle, when developers are more willing to offer mortgage-rate buydowns or other concessions to generate interest or sell the remaining inventory.
That said, buyers may not want to assume today’s deals will be around indefinitely. Berner expects the traditional premium for new homes to gradually return as builders pull back on construction and today’s unusually competitive market normalizes. “I think we’ll see it get back to where it kind of naturally lives,” he says.
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