According to the latest Realtor.com New Construction Quarterly Report, the price premium for newly built homes compared to existing homes fell to its lowest third-quarter level on record.
Builders are also offering substantial mortgage rate buydowns and down payment assistance to ease affordability pressures.
The average mortgage rate for new construction buyers in Q3 2025 was 5.27 per cent, compared to 6.26 per cent for existing-home buyers.
This nearly full percentage point difference represents the widest gap in recent years and reflects builders’ aggressive use of rate promotions.
Down payments were also lower for new home buyers, averaging 15.7 per cent compared to 17.8 per cent for existing-home buyers, a reversal of historical norms where new construction typically required larger down payments.
The median listing price for newly built homes in Q3 2025 was $451,337, holding steady year over year with just a 0.2 per cent increase, while existing-home prices rose 1.6 per cent to $409,667.
When adjusted for size, new construction has actually been less expensive than existing homes on a price-per-square-foot basis for most of the past year.
Realtor.com Chief Economist Danielle Hale said there are significant regional variations in these trends.
“New construction continues to play a critical role in expanding housing options and easing affordability challenges for buyers,” Ms Hale said.
“But many of these benefits are regional. In parts of the South and West, where new construction is more plentiful, buyers are seeing the greatest pricing flexibility and incentives, while in the Northeast and Midwest, new homes remain a more limited, premium option.”
The new-construction price premium fell to 10.2 per cent last quarter, the lowest on record for Realtor.com.
This premium varies dramatically by region, with single-digit premiums in the South (6.3 per cent) and West (0.9 per cent), but much higher premiums in the Northeast (61.6 per cent) and Midwest (55.8 per cent).
Price reductions for new homes have also reached an all-time high, with 15.1 per cent of new construction listings seeing price cuts in Q3 2025.
These reductions were most common in the South and West regions.
The combined effect of these trends means that monthly payments for new and existing homes are nearly identical, with new homes costing approximately $30 more per month while requiring less cash upfront.
Joel Berner, senior economist at Realtor.com, said that these incentives come with potential trade-offs.
“Builders’ incentives are giving buyers great deals on mortgage rates, but there are tradeoffs,” Mr Berner said.
“When buyers pay closer to full price and put less money down, they finance more of the purchase, which raises the risk of ending up underwater if home values fall.
“Even with today’s improved affordability in new construction, it’s important to weigh these incentives against their longer term financial picture.”
