#USA #Austin #Realtor.com #Home Prices #New Construction

New Construction Becomes an Attractive Option for Home Buyers

The real estate market has witnessed a significant change as newly constructed homes become increasingly appealing to potential homeowners. As reported by Realtor.com®, the price premium for new construction has reached an unprecedented low of 7.8% when compared to existing homes for the second quarter of 2025. This marks a pivotal moment for buyers, offering them a chance to invest in new builds at more accessible prices than ever before.

Affordable Home Options Amid Market Shortages

Despite ongoing challenges in the housing market, which continues to face a shortage of nearly 4 million homes, new construction is emerging as a vital solution. As Danielle Hale, the Chief Economist at Realtor.com®, states, "Affordable new construction plays a critical role in restoring balance" in the marketplace. The fact that prices for new homes are often more stable, while existing home prices keep rising, adds to their appeal. In Q2 2025, the median list price for new homes was noted at $450,797, remaining largely unchanged from the previous year, while existing home prices rose by 2.4%, reaching $418,300.

What makes this new construction opportunity even more enticing is the larger square footage offered by newly built homes. On average, new homes cost $218.66 per square foot, compared to $226.56 for their existing counterparts, making them an attractive option in today’s market.

Regional Insights on Price Trends

The affordability advantage provided by new constructions is especially notable in the southern and western regions of the U.S., where such homes constitute a larger share of available listings. However, the West was unique in that it experienced a rise in new-home prices year over year amidst an inflow of lower-priced existing homes, highlighting a complex and evolving market dynamic.

In further regional analysis, it was noted that list prices for new builds fell across 30 of the 100 largest metros, particularly in the South where rising inventories and cooling demand contributed to these declines. For instance, the steepest decreases were recorded in Little Rock, Arkansas (-15.6%); Austin, Texas (-8.5%); and Jacksonville, Florida (-7.8%). These declines, attributed to factors such as increased competition from existing homes, high mortgage rates, and overall buyer caution, signal a shift toward enhanced affordability.

Inventory Dynamics in Different Regions

The abundance of new home inventory in the South speaks volumes, as this region accounts for over 50% of both new and existing listings, outpacing its 39.4% share of U.S. households. This position allows the South to exceed the share of existing homes available on the market, owing to high builder activity. In stark contrast, the Northeast faces a more constrained inventory situation, impacting potential buyers who are keen on both existing and new homes.

Builder Activity and Market Outlook

While builder activity may have somewhat slowed down due to concerns surrounding tariffs and raw material costs, the output of new homes remains robust. Since the onset of the pandemic, listings for new constructions have surged by 37.3%, outpacing the 15.4% increase for existing homes, predominantly occurring in the past quarter alone. Consequently, the overall share of new builds has slightly dipped from its earlier highs.

Who is Buying New Builds?

Realtor.com® has also analyzed buyer behavior across different markets, revealing fascinating insights. In major cities like Los Angeles, New York, and Miami, demand is often spurred by out-of-town buyers attracted to new builds. Conversely, in smaller cities such as Tucson, Arizona, and Toledo, Ohio, local buyers dominate the landscape. This pattern indicates a growing interest in new homes among local residents who recognize the value these new constructions add.

As the market continues to evolve, it's clear that new construction has carved out a significant niche. For buyers seeking value and affordability in an increasingly challenging housing market, newly built homes present a viable option worth exploring.

Conclusion

In a rapidly shifting real estate landscape, the declining price premium for new constructions marks a transition that benefits buyers significantly. With the potential for wider inventory and a focus on affordability, the current trends are positioning new homes as a key player in the quest for housing equilibrium across the United States.