New homes used to cost more than existing ones but that’s changed
New homes used to cost more than existing ones but that’s changed
Andrew Dorn Fri, October 2, 2026 at 10:58 PM UTC
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(NewsNation) — Buying a brand new home used to mean paying a premium, but that hasn't been the case recently.
New homes sold for a median of $205 per square foot in July, compared to $212 for existing homes, according to Zillow — continuing a trend that has held in 17 of the past 19 months.
That marks a reversal from just a few years ago, when new homes sold for more per square foot than existing homes in 77 of 84 months from 2018 to 2024.
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Kara Ng, senior economist at Zillow, said the shift has primarily been driven by the supply of new homes, which is well above pre-pandemic norms, prompting builders to cut prices and offer incentives.
Meanwhile, the inventory of resale homes remains about 17% below pre-pandemic levels, which has helped keep prices elevated.
"There is less incentive for a resale seller to cut their price, especially when many have the option to relist their home as a rental if they do not receive an acceptable offer from a buyer," Ng wrote in the report.
High mortgage rates have also weighed on supply through the so-called "lock-in effect," with owners reluctant to move and give up their lower rates. The average 30-year fixed rate recently hit 7.28%, the highest since November 2023.
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Nationally, newly built homes accounted for 12.6% of all home sales over the 12 months ending July 2026, Zillow said. That's down from 16.7% in 2023 but roughly the same share as in 2019.
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Where new homes cost less than existing ones
New homes cost less per square foot than existing homes in a third of major markets, particularly in the Sun Belt, where building has boomed.
At 19.3% less per square foot, Austin has the deepest new home discount in the nation, followed by Raleigh (14.4%), San Diego (14.4%) and Tampa (12.4%), according to Zillow.
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The pandemic-era construction surge in Texas has also helped new homes account for a larger share of sales.
In San Antonio, for example, new homes made up 37% of sales from August 2025 to July 2026 — up from 24% in 2019. In Dallas, the share of sales made up by new homes is nearly seven points higher than before the pandemic.
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In markets with less homebuilding, including New York City, Cleveland, Milwaukee and Detroit, new homes still command a significant premium.
In New York City, new homes sold for a median of $717 per square foot in July, compared to $441 for existing homes. In Cleveland, the new home premium was $75 per square foot.
"The clearest path out of the affordability crisis is building more homes, as evidenced by affordability gains in many Sun Belt markets where construction has boomed," Zillow said in a release.
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Source: “AOL Money”
