Buying Now? You May Want to Buy New

As new home and existing home prices converge, more buyers are opting for new construction.

Traditionally, existing home prices are lower than newly built homes–and even buyers who dream of moving into a house where no one else has ever lived often settle for an existing home that’s more affordable, at least in the initial cost. But that gap in median prices has narrowed this year.

During the first quarter of 2025, the median sales price of a new home was just $14,600 more than an existing home, according to the National Association of Home Builders (NAHB). In April, the price differential flipped: the median sales price of a new home was $407,200, while the median sales price of an existing home was $414,000. The result: newly built homes represent a larger share of sales than in the past.

“From 1991 through early 2020, just before the pandemic hit, existing-home sales made up about 88% of all home sales,” wrote Odeta Kushi, deputy chief economist at First American in a June 2025 analysis of recent market data. “But in the latest April data, that share had dropped to 84%, its lowest level since 2005. The decline reflects both the relative weakness of the existing home market and the elevated share of new homes in today’s sales mix. In a market where existing homeowners are hesitant to sell, new construction has ramped up to fill some of the gap.”

Homebuilders have an advantage because of their ability to offer incentives such as mortgage rate buydowns, and they can adjust their pricing more quickly than homeowners, Kushi says. Home sellers, who are often buyers as well, are reluctant to give up their low mortgage rate to take on a new loan at a higher rate.

“The result is a housing market moving at two speeds: one stalled by the mortgage rate lock-in effect, the other fueled by flexibility,” she says. “Consider the divergence in performance relative to April 2019: existing-home sales are 25% lower, while new-home sales are nearly 6% higher.”

But there’s another reason that new home sales are accelerating.

More and more buyers in every age cohort are beginning to recognize something essential about the housing affordability crunch: The solution isn’t just about lowering purchase costs. Instead, Green Builder Media’s COGNITION Smart Data surveys find that buyers and homeowners realize that the long-term costs of ownership should be a bigger factor than upfront costs.

Source: COGNITION Smart Data

Operating Costs for New Vs. Existing Homes

There are some key differences in operating costs between new and existing homes that buyers should consider, says Hope Colt, a real estate agent with REMAX Fine Properties in Austin.

“While new homes may require initial investments in items like window treatments, ceiling fans or landscaping, many builders in the Austin area are offering closing cost incentives substantial enough to cover these items—and in many cases, buyers are even negotiating for some of these items to be included,” Colt says. “One major advantage of new construction is energy efficiency. Modern building codes, smart thermostats, tankless water heaters and improved insulation typically result in lower monthly utility costs. For many buyers, this means more savings over time and a home that operates more smoothly from day one.”

The biggest incentive for buyers to choose new construction is that they don’t have to worry about potentially very expensive repair and replacement costs for things like the heating and air conditioning system and the roof, says Lind Goodman, president of BSI Builder Services in Charlotte.

“Resale homes often come with their own list of updates and maintenance needs, which can be more costly in the long run,” Colt says. “Buyers may face aging HVAC systems, roofing or inefficient insulation that can lead to higher utility bills and unplanned repair expenses.”

Builder Incentives Aid Affordability

Still, many buyers worry about the upfront costs of buying a home. Whether it’s an existing home or a newly built home, down payment and closing costs need to be covered. Even if a new house is priced a little higher than a resale property, initial out-of-pocket expenses could be lower.

“We’re seeing discounts as well as interest rate buydowns and closing costs paid depending on the builder and inventory even though we’re in a strong market here in Charlotte,” Goodman says.

Sales incentives are a major driving force in today’s new construction market, Colt says.

“Recently, I helped one of my buyers lock in a 30-year fixed rate at 3.99%, along with $12,000 in closing cost incentives—an incredible value in today’s rate environment,” Colt says. “These incentives vary not only from builder to builder, but often by specific community as well.”

Some other incentives builders offer include design center credits, paid title insurance policies, homeowner association fees and extended warranties, she says.

“Right now, everything is negotiable, and builders are highly motivated to move inventory,” Colt says. “That combination presents a real opportunity for buyers who want to make a smart, well-timed purchase.”

Price Differentials Vary by Market and Home Type

Of course, whether builders offer incentives and the price comparison between new and existing homes depends on local market conditions.

In the greater Austin metro, buyers are not currently paying a premium for new construction homes, according to Colt. In fact, in many cases, new builds offer better overall value than resale properties, she says.

“Our market is experiencing more inventory than we've seen in well over a decade, and combined with elevated interest rates, we are leaning firmly into a buyer-favorable environment,” Colt says. “Builders—often backed by strong financial reserves—are well-positioned to offer significant incentives such as price reductions, closing cost contributions and rate buydowns, making new construction homes especially attractive.”

That means buyers in the Austin area can often find a new home with warranties and energy efficient features for less than or equal cost to a resale property, Colt says. And the long-term operating costs are likely to be less expensive with lower utility bills and the lack of repair concerns.

In Charlotte, though, Goodman says new homes are typically priced higher than existing homes.

“But many other things come into play that still make them a great value,” she says. “New homes offer everything new so things that affect other aspects of the transaction, such as homeowner’s insurance costs and roof ages, don't come into play. Buyers don't have to worry about unexpected additional expenses because everything is new and has a warranty so they can feel confident that the monthly payment is their housing expense.”

What’s Next for New Construction and Existing Homes

As existing home inventory begins to rise in many housing markets and homeowners opt to sell despite their low mortgage rate, homebuilders must meet additional challenges that may once again widen the gap in upfront costs between new and existing homes.

Kushi points out that builders, like buyers, face higher mortgage rates than in the past. Higher construction costs for both labor and materials were up more than 40% in May compared to pre-pandemic levels, Kushi wrote. Tariffs, depending on whether they remain in place, could potentially add nearly $11,000 in costs per home, according to NAHB.

“For now, new construction remains the relative outperformer, but in a more stable rate environment, the tale of two housing markets may start to converge,” Kushi wrote.

The bottom line: Buyers looking to take advantage of market conditions may want to seek out newly built homes sooner rather than later.

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