Realtor.com®: Price Premium for New Construction Hits All-Time Low

Rhea-AI Summary

Realtor.com (NASDAQ:NWSA) reports that new construction homes are becoming more affordable, with the price premium over existing homes reaching a historic low of 7.8% in Q2 2025. The median list price for newly built homes was $450,797, remaining flat year-over-year, while existing home prices rose 2.4% to $418,300.

New construction offers better value per square foot at $218.66 compared to $226.56 for existing homes. Price declines were observed in 30 metros, with the steepest drops in the South, led by Little Rock (-15.6%), Austin (-8.5%), and Wichita (-7.9%). The South leads in housing supply, representing over 50% of both new and existing home listings.

Despite softening builder activity due to tariff concerns and demand uncertainties, new construction listings have grown 37.3% since Q1 2020, though their market share decreased to 16.4% in Q2 2025 from 20.2% in Q2 2023.

Positive

• New construction price premium hit record low of 7.8%, making new homes more affordable
• New builds offer better value at $218.66 per square foot vs $226.56 for existing homes
• New construction listings grew 37.3% since Q1 2020, outpacing existing homes at 15.4%
• South leads nation in housing supply with over 50% of new and existing home listings

Negative

• Builder activity softening due to tariff concerns and demand uncertainties
• New construction market share declined to 16.4% from 20.2% year-over-year
• Price premiums remain over 50% higher in Midwest and Northeast regions
• Market still faces shortage of nearly 4 million homes

News Market Reaction

-1.56%

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-1.56% News Effect

On the day this news was published, NWSA declined 1.56%, reflecting a mild negative market reaction.

Data tracked by StockTitan Argus on the day of publication.

Pandemic new construction hot spots Austin, Texas; Jacksonville, Fla.; and Cape Coral, Fla., see price declines of -8.5%, -7.8% and -7.4%, respectively

AUSTIN, Texas, Aug. 7, 2025 /PRNewswire/ -- New construction is becoming a more affordable, and increasingly attractive, option for today's buyers as the price premium over existing homes hit a record low of 7.8% in Q2 2025. According to the latest Realtor.com^® New Construction Quarterly Report, newly built homes are not only more plentiful than they've been in recent years, but also offer better value on a per-square-foot basis than existing homes, especially in the South where supply is rebounding fastest.

"In a market still grappling with a shortage of nearly 4 million homes, affordable new construction plays a critical role in restoring balance. Even with recent slowdowns in starts and permits, builders continue to deliver new homes to the market at a healthy pace," said Realtor.com^® Chief Economist Danielle Hale. "In many areas, these homes are not only available, they also offer better value compared to existing home inventories. We're even seeing new home price declines in some of the most active pandemic-era hot spots, signaling a shift toward greater affordability in markets that were previously out of reach for many."

New construction premium hits all-time low

In Q2 2025, the price premium for new construction compared to existing homes dropped to a record low of 7.8%, as builders held pricing steady and existing home prices continued to rise.  The median list price for a newly built home was $450,797 in Q2, essentially flat from a year ago, while the median existing home prices rose 2.4% to $418,300. New homes also tend to be larger, offering better value per square foot. Nationally, new builds averaged $218.66 per square foot, compared to $226.56 for existing homes.

The affordability edge is strongest in the South and West, where new homes make up a greater share of for-sale listings. While three U.S. regions saw a shrinking price premium, the West, which offers relatively lower new construction prices compared to the other regions, was the only region where the new-home premium rose year over year – a reflection of strengthening new home prices and an influx of lower-priced existing homes.

Prices fall in 30 metros, with sharpest drops in the South

Locally, new build list prices declined in 30 of the 100 largest metros, with the steepest declines in the South, where inventory is high and demand has cooled. The top five markets seeing the biggest drops in new construction list prices are Little Rock, Ark. (-15.6%); Austin, Texas (-8.5%); Wichita, Kan. (-7.9%); Jacksonville, Fla. (-7.8%); and Cape Coral, Fla. (-7.4%). These price drops are from a combination of factors: builder efforts to offer more affordable options, rising competition from existing homes, and weaker buyer demand from high mortgage rates and low buyer confidence.

South leads in new home inventory

The South continues to lead the nation in housing supply, accounting for more than 50% of both new and existing home listings – outpacing its 39.4% share of U.S. households. It's also the only region where its share of new builds exceeds its share of existing homes for sale, thanks to high levels of builder activity. In contrast, the Northeast remains the most inventory-constrained region, with a significant shortage of both existing and new construction homes for its 17.1% share of U.S. households.

In the Midwest and Northeast, tighter inventories and high demand have pushed new build prices well above existing homes, more than 50% higher in many cases, making new construction largely a premium product in those regions.

Builder activity softens amid tariff and demand concerns, completions stay strong

While builder activity has softened amid tariff concerns and the threats of lower demand and higher material costs, completions have continued to hit the market at a steady rate since the pandemic, as builders stepped in to meet elevated housing demand. Since Q1 2020, new construction listings have grown 37.3%, compared to a 15.4% increase for existing homes, most of which occurred in the past quarter. That influx of existing home listings has diluted the overall share of new homes for sale on the market, now down to 16.4% in Q2, from its quarterly high of 20.2% in 2023 Q2, and 17.9% a year ago.

Who's shopping for new builds, and where

Realtor.com^® cross-market demand data shows differences in buyer shopping behavior for new builds across markets. In major metros like Los Angeles, New York and Miami, demand is largely driven by out-of-town buyers. In contrast, middle-tier cities such as Tucson, Ariz.; Toledo, Ohio; and Bakersfield, Calif., see the majority of new construction interest coming from local shoppers.

Meanwhile, new home shoppers in construction rich areas, like Durham, N.C.; Atlanta, and Salt Lake City are more likely to seek out new construction even when searching outside their own metro area. This suggests that once consumers see or experience the benefits of new builds in their local market, they actively look for similar options elsewhere.

Methodology

Realtor.com^® housing data as of June 2025. Listings include the active inventory of newly built single-family homes and condos/townhomes/row homes/co-ops for the given level of geography on Realtor.com^®. Realtor.com^® data history goes back to July 2016. Cross market data includes all views of listing detail pages on Realtor.com^® during the second quarter of 2025.

About Realtor.com^®

Realtor.com^® pioneered online real estate and has been at the forefront for over 25 years, connecting buyers, sellers, and renters with trusted insights, professional guidance and powerful tools to help them find their perfect home. Recognized as the No. 1 site trusted by real estate professionals, Realtor.com^® is a valued partner, delivering consumer connections and a robust suite of marketing tools to support business growth. Realtor.com^® is operated by News Corp [Nasdaq: NWS, NWSA] [ASX: NWS, NWSLV] subsidiary Move, Inc.

Media Contact: Sara Wiskerchen, press@realtor.com

 

View original content:https://www.prnewswire.com/news-releases/realtorcom-price-premium-for-new-construction-hits-all-time-low-302524107.html

SOURCE Realtor.com

FAQ

What is the current price premium for new construction homes in Q2 2025?

The price premium for new construction homes reached a record low of 7.8% compared to existing homes in Q2 2025, with new homes listing at a median price of $450,797.

Which cities saw the biggest price drops in new construction homes?

The largest price declines were in Little Rock (-15.6%), Austin (-8.5%), Wichita (-7.9%), Jacksonville (-7.8%), and Cape Coral (-7.4%).

How does the price per square foot compare between new and existing homes?

New construction homes offer better value at $218.66 per square foot, compared to $226.56 for existing homes.

How much has new construction inventory grown since the pandemic?

New construction listings have increased by 37.3% since Q1 2020, compared to a 15.4% increase for existing homes.

Which region leads in new home construction supply?

The South leads the nation in housing supply, accounting for more than 50% of both new and existing home listings, exceeding its 39.4% share of U.S. households.