Source: Fortune
Summary
New homes are selling for less than existing ones for the first time since 1974, with the median price of a new single-family home at $403,200, $1,400 below the median existing home price of $404,600. Builders are offering incentives and discounts to move inventory, while existing home sellers are holding onto prices. The shift is driven by a mix of factors, including rising construction costs, smaller home sizes, and regional differences in supply and demand.
Our Reading
The numbers tell one story.
Builders are getting generous with incentives, and sellers are refusing to budge on prices. The median size of new homes has shrunk to 2,400 square feet, and construction costs are rising due to tariffs on building materials. Existing home prices are “sticky” and slow to adjust to market changes, while builders are under pressure to move inventory. The generational divide is also at play, with baby boomers dominating the market and holding onto homes due to low-rate mortgages or owning outright.
The true discount on new homes could be more substantial, with builders offering incentives beyond price cuts, such as design credits and covered closing costs.
The takeaway is that the premium on new homes is negative for the first time ever, and there are deals to be had.
Builders are willing to deal, but sellers are holding onto the old for the highest dollar.
