Buyers usually pay a big premium for brand new homes, but not these days. The price gap between a new home versus an existing home is near historical lows — a favorable trend for home shoppers who want all new floors, fixtures, appliances, and more.¹

A new single-family home sold for a median price of $416,900 in the first quarter of 2025, compared to a $402,300 median price for an existing home. The $14,600 price gap is the lowest in several quarters after reaching $64,200 at the end of 2022, according to the National Association of Homebuilders.²

Builders have been reducing prices and offering incentives such as mortgage-rate buydowns or covering closing costs in a bid to reduce inventory and entice buyers in a challenging market where 30-year home loans have stayed stubbornly close to 7%.^3,4

Read more: Mortgage buydown: What it is and how it works

Sweetening the home deal 

Buyer sweeteners accounted for about 7% of new home purchase prices in early April, even though such incentives typically dry up in the spring when real estate transactions pick up.⁵

This season has been uneven at best. Existing home sales declined 0.5% this April compared to March and are down 2% from April 2024. The seasonally adjusted annual rate of 4 million existing home sales in April was the lowest since September 2024.⁶

The market for new homes is smaller, but sales were noticeably higher in April. New homes sold at a seasonally adjusted annual rate of 743,000 in April 2024, up 10.9% from March 2025 and 3.3% higher than April 2024.⁷ 

Finding the right size 

Many economists are guarded on market optimism until sales make a more sizeable dent in elevated inventories of unsold homes. The supply of new single-family homes declined slightly to 504,000 in April, but remains near levels last seen in late 2007.⁸

Newly built homes have been getting smaller since the pandemic in a bid to entice some home shoppers, especially first-time buyers and retirees. The median square footage of a new single-family unit was 2,034 square feet in March 2025, down 4.7% from 2,135 square feet in March 2020.⁹

Finding the right-sized home is just as important as incentives for many buyers. It’s also seen as a good way for builders to keep sales flowing and alleviate some construction material costs facing pressure from tariffs.¹⁰

Read more: Tariff update: U.S.-China pause raises hope for home costs

New versus existing: What homebuyers want 

More than half of Americans (52%) view owning a home as a top sign of financial success, Empower research shows.

New home shoppers might find the best deals in the Sun Belt or parts of the Midwest or Mountain West, with new properties accounting for more than half of listings in some spots. Metro areas in North Carolina, South Carolina, Georgia, Tennessee, Texas, Idaho, and Iowa have the largest share of new home listings, according to Realtor.com.¹¹

Some buyers favor new homes because of modern layouts and features, such as larger, brighter rooms and bigger closets than many older homes. Newer, energy efficient appliances are also a big draw, along with smart technologies that are often built into new homes, controlling lighting, thermostats, security systems, and more.¹² 

New homes often require less maintenance or replacement costs because everything is new and often covered by builder warranties that typically range from 1 to 10 years, depending on the problem. Warranties are required for new homes bought with Federal Housing Authority (FHA) loans and Veterans Affairs (VA) loans.¹³

Newer doesn’t mean better for all buyers. Many older homes have unique craftsmanship and “good bones” thanks to sturdy materials such as heavier framing timbers or plaster walls that can be more soundproof. Existing homes are more likely to be in walkable neighborhoods with mature landscaping, along with shorter distances to stores, schools, and offices compared to many newer subdivisions.¹⁴

The good news for all types of buyers is that inventories of both existing homes and new homes are robust in this challenging market. Redfin estimates there are 1.9 million homes for sale in the U.S. but only about 1.5 million active homebuyers.¹⁵

That’s leaving plenty of options for prospective buyers to find something that meets their needs — and perhaps win some seller incentives or concessions along the way.

Read more: Sellers sweeten the deal: 44% help with closing costs and repairs