Highlights
- Newly built homes are becoming more affordable, with the median list price of $448,393 down 0.3% year over year. The premium on new construction has reached its lowest level of any first quarter since 2020.
- While existing inventory is nearly back to its 2020Q1 levels, new-home inventory exceeds the 27.4% level of five years ago.
- In 26 of the 100 largest U.S. metros, both new-construction prices and square footage are down year over year. These are the places where builders are most effectively delivering smaller, lower-cost inventory.
- New-home buyers pay lower mortgage rates, by about half of a percentage point (6.1% vs 6.6% in 2024).
The purpose of this quarterly report is to track what’s happening in the newly built homes market, and to show how the market for new-construction homes differs from the market for existing homes. The need for this kind of segmentation and analysis was made abundantly clear by the March releases of New-Home Sales and Existing-Home Sales data. The existing-home market was especially sluggish in March, with the annualized pace of sales falling below the 2024 actual figure (itself the worst sales year since 1996). The lone bright spot in the market for existing homes has been the luxury segment, which has held strong even as the overall market slows. Meanwhile, new-home sales picked up steam in March, driven by lower-cost inventory. The new-construction segment is filling in the gaps of missing affordable inventory in the resale market, and we will see below exactly where these smaller and less expensive homes are available.
Market summary
The median list price for a newly built home in the first quarter of 2025 was $448,393, down 0.3% from the first quarter of 2024 and 1.3% from the first quarter of 2023. Since peaking in the third quarter of 2023, the price of new homes in the U.S. has steadily declined. Existing-home prices have done the opposite: The $394,963 median list price for resale homes is up 1.4% since the first quarter of 2024 and 5.1% since the first quarter of 2023.
With existing-home prices growing and new-home prices falling, the new-construction premium, shown below in blue, has been shrinking. At 13.5%, the new-construction premium has reached its lowest point in any first quarter of our data history going back to 2020. Not only are new builds becoming relatively more affordable, but they are also becoming more plentiful. The 18.5% newly built share of for-sale listings, shown in blue below, is down slightly from a year ago (20.3% in 2024Q1), but this can be attributed to more existing listings building up on the market this year. It’s also a higher share than in the first quarters of 2020–22.
Separating the growth in the new-construction listing count and resale listing count shows that the new-build market has more than recovered from the COVID-19 market shock, with listings in the current quarter exceeding 2020Q1 by 27.4%. Existing listings, meanwhile, were still 6.9% below their level from five years ago.
We know that this inventory recovery has not been uniform across the country, and that the supply gap is much more severe in the Northeast and Midwest than in the South and West. New-construction activity is a major reason for this, with a majority of homes built in the past few years being in the South and West. The regional snapshot below shows the current situation, with the South having a higher share of new-construction listings and a lower new-construction premium than the nation at large. The Northeast, meanwhile, has the lowest share of new builds and the highest new-construction premium of any region.
Zoning and limited land resources make building in the Northeast more complicated, but the elevated prices new builds can command there might entice builders to concentrate on that region going forward. The Midwest has a similar new-construction premium and only a slightly higher share of new construction on the market, so it is ripe for builders’ attention as well.
Metros with smaller, more affordable new builds
Among the 100 largest metropolitan areas in the U.S., 26 saw year-over-year decreases of both new-construction median list price and new-construction square footage. These are the metros where the smaller, more affordable new homes are concentrated. The darker the green, the more it has decreased the size and price of its new builds since the first quarter of 2024.
| Metro | Median Listing Price YY | Square Footage YY |
| Albuquerque, NM | -4.3% | -6.2% |
| Atlanta-Sandy Springs-Roswell, GA | -1.5% | -1.9% |
| Austin-Round Rock-San Marcos, TX | -9.9% | -6.2% |
| Cape Coral-Fort Myers, FL | -6.6% | -2.6% |
| Chattanooga, TN-GA | -2.4% | -3.7% |
| Chicago-Naperville-Elgin, IL-IN | -4.5% | -6.8% |
| Colorado Springs, CO | -6.5% | -13.8% |
| Deltona-Daytona Beach-Ormond Beach, FL | -0.4% | -1.1% |
| Denver-Aurora-Centennial, CO | -1.7% | -6.9% |
| El Paso, TX | -0.2% | -2.2% |
| Indianapolis-Carmel-Greenwood, IN | -1.7% | -4.8% |
| Jacksonville, FL | -5.8% | -4.9% |
| Lakeland-Winter Haven, FL | -4.8% | -1.5% |
| Little Rock-North Little Rock-Conway, AR | -12.9% | -9.7% |
| McAllen-Edinburg-Mission, TX | -0.2% | -4.8% |
| Nashville-Davidson–Murfreesboro–Franklin, TN | -5.3% | -1.3% |
| North Port-Bradenton-Sarasota, FL | -4.0% | -1.8% |
| Oxnard-Thousand Oaks-Ventura, CA | -11.6% | -2.4% |
| Philadelphia-Camden-Wilmington, PA-NJ-DE-MD | -0.6% | -4.4% |
| Portland-Vancouver-Hillsboro, OR-WA | -0.5% | -1.2% |
| Raleigh-Cary, NC | -0.5% | -1.2% |
| Richmond, VA | -2.6% | -6.3% |
| San Antonio-New Braunfels, TX | -0.9% | -2.2% |
| San Jose-Sunnyvale-Santa Clara, CA | -4.5% | -11.5% |
| Tulsa, OK | -6.8% | -6.2% |
| Wichita, KS | -4.1% | -9.1% |
Unsurprisingly, we see the South featured heavily again. Atlanta, Nashville, and several of the Texas and Florida metros make this list. Little Rock is notable for having the largest decrease in new-construction median list price year over year, at -12.9%. Some other major cities without major new-construction activity are present as well, like Philadelphia and Chicago, which is encouraging for those parts of the country that have not been as highly prioritized by builders as many of the Southern cities. Out West, we see some of the most dramatic year-over-year changes, like Colorado Springs, where new builds shrank by 13.8% from 2024 to 2025, and Oxnard, CA, where new build prices fell 11.6% from an already lofty level.
New builds come with lower mortgage rates
We showed last quarter that new builds are more likely than existing homes to offer incentives like mortgage rate buydowns. The close (sometimes in-house) relationships between builders and lenders allow them to make special financial deals with new-home buyers to complete the sale. How much of a difference does this actually make? We looked at mortgage records to compare the rates paid by buyers of new homes against rates paid by buyers of existing homes. Through 2021, there was little difference. However, from 2022 to 2024, as mortgage rates increased, so did the discount given to new-home buyers. In 2023 and 2024, new-home buyers paid about half of a percent lower mortgage rates than existing-home buyers.
For context, on the median new-home list price of $448,393, the difference between a 6.8% 30-year fixed-rate mortgage and a 6.3% mortgage is over $168 per month. This kind of savings is part of the appeal of new construction, even before factoring in the lower cost of maintenance on a new home.
What to look for going forward
Given the current political environment, we would be remiss not to mention the effect that tariffs will have on new construction. Trade policy changes on an almost daily basis, but for now, it appears that an additional tariff on Canadian lumber will go into effect this fall, raising the duty from about 14% to about 34%. As we have shown, builders are currently able to deliver the type of low-cost home inventory that U.S. consumers demand. Tariffs on Canadian lumber, gypsum (used for drywall) from Mexico, and a variety of other homebuilding components from China will put this ability in peril. Builders’ costs will increase, which means that the price of homes will increase, and the affordability challenges facing prospective homebuyers will only worsen. Builders and consumers alike should keep a close eye on tariff developments that will affect their ability to sell and buy homes at desirable prices
Methodology
Realtor.com housing data as of March 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.