Key facts
- New homes nationally cost less per square foot than existing homes, a reversal of the pre-pandemic trend.
- Builders are offering discounts and incentives to sell speculative inventory, especially in Sun Belt markets.
- New homes in supply-constrained markets like the Northeast and Midwest continue to sell at a premium.
- The U.S. has 9.6 months of new-home supply, well above pre-pandemic levels.
- Green Brick Partners, with a 29.8% gross profit margin, has more flexibility for discounts than Hovnanian Enterprises, with a 14.6% margin.
- Resale market sellers are also cutting prices and offering concessions in response to new home market dynamics.
New homes are now selling for less per square foot than existing homes nationwide, a significant shift from the pandemic era when new construction typically commanded a premium. This trend, driven by a construction boom and increased inventory, has led builders to lower prices and offer incentives to attract buyers.
According to a Zillow analysis, as of July 2026, new homes sold for a national median of $205 per square foot, compared to $212 per square foot for existing homes. This marks a reversal from prior years, where new homes generally sold for more. The discount for new homes has been evident for 17 of the last 19 months, with the steepest discount recorded in June 2026 at $12 per square foot.
The median sales price for a new home was $393,700 in August, near a five-year low and down from a peak of $442,600 in Q4 2022. In contrast, the median sales price for existing homes was $429,100 in August, according to the National Association of Realtors.
Builders are increasingly willing to cut prices and offer incentives to move speculative inventory, a strategy that sellers in the resale market are less able or willing to match. This trend is most pronounced in high-growth Sun Belt markets with abundant new supply, where the market is slower for sellers. Conversely, in supply-constrained markets, particularly in the Northeast and Midwest, new homes continue to sell at a premium.
The U.S. Census Bureau reported 9.6 months of new-home supply in July 2026, significantly higher than the roughly six months seen in 2018 and 2019. This elevated supply gives buyers more leverage. Builders' ability to offer discounts depends on their gross profit margins; companies like Green Brick Partners, with high margins, have more flexibility than those like Hovnanian Enterprises, with tighter margins.
The competition from resales and rentals also influences the market. Sellers in the resale market are increasingly cutting prices to compete with new home discounts and broader affordability pressures. Renting also remains a more viable option for many, as affordability challenges sideline prospective buyers.