The price premium for new construction compared to existing homes dropped to a record low of 7.8% during the second quarter, according to new data from Realtor.com.
The median list price for a newly built home in the second quarter was $450,797, essentially flat from one year earlier, while the median existing home prices rose 2.4% to $418,300. Realtor.com observed that new homes tend to be larger, thus providing a better value per square foot – new builds averaged $218.66 per square foot versus $226.56 for existing homes.
New build list prices declined in 30 of the nation’s 100 largest metros, with the steepest declines in the South, where inventory is high and demand has cooled. The top five markets seeing the biggest drops in new construction list prices are Little Rock, Arkansas (-15.6%); Austin (-8.5%); Wichita, Kansas (-7.9%); Jacksonville, Florida (-7.8%); and Cape Coral, Florida (-7.4%).
The South also to lead the nation in housing supply, accounting for more than 50% of both new and existing home listings – outpacing its 39.4% share of US households. It was also the only region in the second quarter where its share of new builds exceeded its share of existing homes for sale. In contrast, the Northeast remains the most inventory-constrained region, with a significant shortage of both existing and new construction homes for its 17.1% share of households.
“In a market still grappling with a shortage of nearly 4 million homes, affordable new construction plays a critical role in restoring balance. Even with recent slowdowns in starts and permits, builders continue to deliver new homes to the market at a healthy pace,” said Realtor.com Chief Economist Danielle Hale. “In many areas, these homes are not only available, they also offer better value compared to existing home inventories. We’re even seeing new home price declines in some of the most active pandemic-era hot spots, signaling a shift toward greater affordability in markets that were previously out of reach for many.”
