New Homes Now Cheaper Per Square Foot Than Existing Ones in Many Markets
New construction undercuts existing home prices in one-third of major U.S. markets, with Sun Belt building booms driving the trend.
Newly built homes are undercutting existing properties on a per-square-foot basis in roughly one-third of major U.S. markets, according to a new analysis from Zillow — a shift that challenges the long-held assumption that new construction commands a premium.
Nationally, the median price for a newly built home stands at $205 per square foot, compared with $212 per square foot for existing homes, the Zillow data show. That $7-per-square-foot gap may appear modest, but it represents a meaningful reversal in the traditional pricing relationship between new and resale properties.
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Sun Belt metros, where homebuilders have aggressively expanded inventory over the past several years, account for the bulk of the markets where new construction offers superior value. The sustained pace of residential development in those regions has given builders both the scale and the competitive pressure to keep prices in check, effectively narrowing — and in many places erasing — the new-home premium that prevailed during the pandemic-era construction boom.
The dynamic carries practical implications for buyers who have been sidelined by high resale prices and limited existing inventory. In markets where new homes offer a lower cost per square foot, first-time and move-up buyers may find that newly built properties deliver more usable space for comparable or lower outlays, particularly when builders sweeten deals with mortgage rate buydowns and other concessions.
The trend also adds pressure on sellers of existing homes, who may struggle to justify higher per-square-foot asking prices when move-in-ready new construction sits nearby at a discount. Continue reading at Economic News, Trends, Analysis.
