A new analysis from Zillow reveals that newly built homes are now selling for less than existing homes in many U.S. housing markets, reversing a long-standing trend where new construction typically commanded a premium. In July, the median price for newly built homes was $205 per square foot, compared to $212 for existing homes nationwide, according to Zillow's data. This marks a significant shift, as from 2018 through 2024, new homes sold for more per square foot than existing homes in 77 out of 84 months [1].
The report highlights that over the past 19 months, homebuilders have increasingly reduced prices and offered incentives to move inventory, resulting in new homes selling at a discount to existing homes in 17 of those months. High mortgage rates have contributed to this trend by discouraging homeowners from selling, thereby reducing the supply of existing homes and making new construction more attractive to buyers [1].
The largest discounts are found in the Sun Belt, where a surge in homebuilding has increased supply. In Austin, Texas, new homes are selling for 19.3% less per square foot than existing homes, followed by Raleigh, North Carolina, at a 14.4% discount, and Tampa, Florida, at 12.4%. Zillow senior economist Kara Ng noted that builders in these markets are actively competing for buyers by lowering prices and offering incentives such as mortgage rate buydowns, which typical resale sellers cannot match [1].
Nationally, new homes accounted for 12.6% of all home sales in the 12 months through July 2026, with significant variation by market. For example, new construction represented 37.1% of home sales in San Antonio and 33.6% in Raleigh, but only 2% in Hartford, Connecticut. Despite these gains in affordability, Ng cautioned that the U.S. remains about 4.7 million homes short of demand, and permitting for new construction is slowing. She warned that the current improvements in affordability could reverse if building does not keep pace, emphasizing the importance of local policy reforms such as zoning changes and streamlined permitting [1].
CONCLUSION
The Zillow analysis indicates a notable shift in the U.S. housing market, with new homes now offering better value than existing homes in many areas due to increased supply and builder incentives. While this trend has improved affordability in certain markets, ongoing shortages and slowing permitting could threaten these gains if not addressed. Market participants should monitor local policy developments and construction activity for future impacts.