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The affordability hole between shopping for newly constructed houses and current houses declined within the third quarter as builders look to capitalize on the uptick in demand with incentives.
The worth per sq. foot for a new-construction house is decrease than the value for an current house within the South and West specifically, in response to Realtor.com’s third quarter report on new building.
Each the South and West have extra provide of latest building and better worth reductions, whereas the Northeast and Midwest have fewer new-construction houses listed with extra modest worth reductions.
“Builders have a good amount of spec inventory that they are trying to move right now as the market cools down both seasonally and in terms of price and sales growth,” stated Joel Berner, senior economist at Realtor.com. “Quick move-in inventory is readily available, and builders are cutting prices and offering incentives to get it sold.”
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New house affordability is rising within the South and West amid a rise in stock and extra incentives for consumers. (Matthew Busch/Bloomberg/Getty Photos)
Housing stock within the South and West has largely returned to pre-pandemic ranges on account of builders delivering new building, whereas newly constructed houses have a single-digit worth premium and all houses have increased charges of worth reductions than different areas, the report discovered.
In contrast, new building is at a premium within the Northeast and Midwest, and people areas had a few of the hottest and most seller-friendly housing markets within the nation.
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Traditionally, consumers of latest houses had bigger down funds than these of current houses, although that dynamic has shifted. (Mario Tama/Getty Photos)
The median worth per sq. foot for brand new builds was $200 within the South and $292 within the West, whereas it was $353 within the Northeast and $227 within the Midwest, in response to the Realtor.com evaluation. For current houses, these figures have been $204 within the South, $320 within the West, $271 within the Northeast and $168 within the Midwest.
“Now, new-builds are price-competitive with existing homes and actually more affordable on a per-square-foot basis,” Berner stated. “In a market where affordability is the top concern, new homes are priced to sell, and they also offer attractive financing that lowers the burden of the two most onerous parts of buying a home: the down payment and the monthly payment.”
Worth reductions are at an all-time excessive for newly constructed houses, with 15.1% of listings decreasing their costs within the third quarter of 2025, the report discovered. These reductions are much less frequent in areas with extra constrained housing markets.
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Incentives like mortgage price buydowns and below-market mortgage charges have gotten extra frequent for consumers of newly constructed houses. (iStock)
Within the South and West, the place there’s extra provide, worth reductions are extra frequent, with 16.6% of latest builds within the West and 15.9% of these within the South having their costs lowered. Within the Northeast, simply 7.8% of latest builds had worth reductions, and simply 12.2% within the Midwest, in response to the report.
A latest Realtor.com research discovered that mortgage price buydowns and below-market mortgage charges are a standard promotion to draw consumers to new building given elevated mortgage charges.
Within the third quarter of 2025, the report confirmed that the typical 30-year mortgage price on the deed of an current homebuyer was 6.26% – whereas for brand new house consumers the typical 30-year price was 5.27%. Mortgage charges being 99 foundation factors decrease for brand new house consumers within the third quarter is a bounce from the prior two quarters, which have been 51 and 54 foundation factors, respectively.
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Down funds on new house purchases are additionally lowering regardless of new-construction consumers traditionally making bigger down funds than these shopping for current houses.
In the newest quarter, new house consumers put down 15.7% of the acquisition worth whereas consumers of current houses put down 17.8%. For comparability, within the third quarter of 2022, new house consumers have been placing down 18.3% and current house consumers put down 17.2%.
