Housing and Urban Development Secretary Scott Turner discusses relaxing regulations to boost supply, examines underutilized federal land and responses to rent freeze proposals.
The affordability gap between buying new-build homes and existing homes fell in the third quarter as builders look to respond to rising demand with incentives.
According to Realtor.com’s third quarter report on new construction, the price per square foot for a new construction home is lower than the price for an existing home in the South and West.
Both the South and the West have more new construction supply and higher price reductionswhile the Northeast and Midwest have fewer new construction homes listed with more modest price reductions.
“Builders have a good amount of spec inventory that they are trying to move now as the market cools seasonally and in terms of price and sales growth,” said Joel Berner, senior economist at Realtor.com. “Quick occupancy inventory is readily available, and builders are lowering prices and offering incentives to get it sold.”
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Affordability of new homes is rising in the South and West, amid an increase in inventory and more incentives for buyers. (Matthew Busch/Bloomberg/Getty Images)
Housing stock in the south and west has largely returned to pre-pandemic levels as builders deliver new construction, while new-build homes see single-digit price increases and all homes see higher price reductions than in other regions, the report shows.
In contrast, new construction in the northeast is expensive Midwestand those regions had some of the hottest and most seller-friendly housing markets in the country.
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Historically, buyers of new homes have had larger down payments than those of existing homes, although that dynamic has shifted. (Mario Tama/Getty Images)
The median price per square meter for new construction was $200 in the South and $292 in the West, while it was $353 in the Northeast and $227 in the Midwest, according to Realtor.com’s analysis. For existing homes, these figures were $204 in the South, $320 in the West, $271 in the Northeast and $168 in the Midwest.
“Now new construction homes are price competitive with existing homes and even more affordable per square foot,” Berner said. “In a market where affordability is the biggest concern, new homes are priced to sell, and they also offer attractive financing that reduces the burden of the two most burdensome parts of buying a home: the down payment and the monthly payment.”
Price reductions for new-build homes are at an all-time high: 15.1% of homes have reduced their prices in the third quarter of 2025, the report shows. These reductions are less common in regions with more limited housing markets.
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Incentives such as buying down mortgage interest rates and mortgage interest rates that are below market prices are becoming increasingly common among buyers of new-build homes. (iStock)
In the South and West, where supply is greater, price reductions are more common: prices are reduced in 16.6% of new-build homes in the West and 15.9% of new-build homes in the South. In the Northeast, only 7.8% of new construction saw a price reduction, and only 12.2% in the Midwest, the report said.
A recent survey by Realtor.com found that mortgage interest buyouts and below-market mortgage rates are a common promotion to attract buyers to new construction, given high mortgage rates.
In the third quarter of 2025, the report found that the average thirty-year mortgage rate on an existing homebuyer’s deed was 6.26% – while for new homebuyers, the average thirty-year mortgage rate was 5.27%. The fact that mortgage rates are 99 basis points lower for new home buyers in the third quarter is an increase compared to the previous two quarters, which were 51 and 54 basis points respectively.
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Down payments for new home purchases are also declining, despite buyers of new construction historically making larger down payments than buyers of existing homes.
In the most recent quarter, buyers of new homes paid 15.7% of the purchase price, while buyers of existing homes paid 17.8%. By comparison, in the third quarter of 2022, new home buyers fell 18.3% and existing home buyers fell 17.2%.
