For the first time in 50 years, it’s now cheaper to buy a new home than an existing one — what that says about the state of US real estate

While that trend began in 2024, a recent John Burns Research and Consulting (JBREC) client report viewed by Moneywise showed that, for the first time in 52 years — which is as far back as the data goes — premiums on new homes dropped into the negative, hitting -2% in April.

“If you look at the aggregate level, the median new home price is below the median resale price across the country. It’s the first time that’s happened,” Alex Thomas, JBREC’s macro research manager, told Moneywise. “These aren’t 100% apples to apples comparisons, but I do think that … premium has compressed nationally.”

Thomas, however, cautioned that new-home prices aren’t falling everywhere. While the national average suggests savings, the price drops aren’t spread evenly across the map.

A tale of two housing markets

One main driver behind lower new home prices is the builders themselves, who are attempting to sell off an unusually high inventory.

A July report from the National Association of Homebuilders (NAHB) noted falling confidence among builders for sales of new single-family homes as buyers “wait for lower mortgage rates, more certainty on inflation and a clearer economic outlook.”

Mortgage rates hit 6.66% at the end of July, the highest in a year.

As such, the NAHB added that 37% of builders cut prices in July, offering a 6% slash on average. Overall, 63% offered sales incentives.

“What we’re hearing from builders is a lot of buyers are going out and they’re going incentive shopping in these communities,” Thomas said, adding that buyers increasingly ask what rate buydowns or other perks are available.

Builder incentives can include anything from lower interest rates to appliance and design or credits and flex cash to put toward closing costs, according to Zillow.

Thomas explained, however, that the incentives and slashed prices “definitely depends on the region.”

He pointed to hot spots like Florida, Texas and the rest of the Sunbelt as locales where builders are competing with each other to move their supply.

Conversely, he said the midwest and northeast don’t have as much new home construction and that “even if you are at a new home community there, they may not need to offer the same incentives because there’s just not as much resale supply that they’re competing with.” He added that many in those areas “are locked in at their 3% mortgage rates.”

Meanwhile, Thomas characterized the wider real estate landscape as “two different markets right now” because prices on existing homes are barely budging.

The National Association of Realtors reported a 2.4% decrease in existing home sales in June, while Redfin found that 5.8% of all home listings were pulled off the market across the country in April — tying a single-month record dating back to 2020 while reflecting a buyer’s market where supply is outpacing demand.

“Prices are stickier on the way down on the resale side,” Thomas added, explaining that some sellers delist and wait out the market or look at what their neighbor sold for previously and remain “stuck on that price and not willing to go down to actually sell their home right now.”

Perks are nice, but here’s what to consider beyond builder incentives

It all sounds pretty simple — head for the Sunbelt and shop for the best builder incentives.

Experts, however, caution it’s not that easy. While incentives and price cuts are great, Zillow warns that they can come with a catch. For example, getting a lower interest rate often means choosing the builder’s preferred lender, while temporary buydowns could leave you with a bigger price tag than you expected when it expires. Or, they add, credits toward closing costs could hinge on your credit score.

Meanwhile, if they’re in your price range, existing homes can offer their own perks, including established neighborhoods and amenities, more character and a quicker move-in time. As well, to keep prices lower, many new builds are constructed on smaller lots with less square footage.