Buying a Brand-New Home Just Got Cheaper—Especially in These 2 Markets

Homebuyers are slowly finding affordability, but it depends on where they’re looking.

The median listing price for a new-construction home in the U.S. inched down at the end of December, compared to the year before—with the South and West emerging as the best places to buy a freshly built house.

Last year was a strong one for new construction, with 1,020,600 single-family homes hitting the market, according to housing completions data from the U.S. Census Bureau—up from 998,900 in 2023.

The average newly built home had a median listing price of $449,967 in December—down 0.7% year over year, according to the latest available data from Realtor.com®.

And while the price decrease was only marginal, there was more good news for consumers—because the premium on new construction, compared to existing homes, plunged 3.6 percentage points from the same time in 2023.

Buyers were paying a 13.7% premium for newly constructed homes between October and end of December—the lowest fourth-quarter premium in four years.

Simply put, a house hunter had to shell out just over $54,000 extra on average to purchase a newly built rather than an existing home with a median listing price of $395,800.

New-construction inventory remains strong

What’s more, the stock of newly constructed homes continued to gain ground at the end of 2024—even as the houses themselves continued to shrink.

“Newly built homes are becoming smaller and more affordable, as builders work to chip away at the supply gap that has plagued the United States since the Great Recession and get more buyers into new homes,” says Realtor.com senior economist Joel Berner.

The share of new-construction listings remained elevated, even as more existing homes were being listed and lingering on the market for longer.

Based on the most recent data, newly built listings accounted for just over 18% of all the listings on the market in the fourth quarter.

For comparison, the new-construction share of listings during the same period in 2021 was slightly above 15% and came with a premium of just under 28%.

In another positive sign, newly built listings have recovered to pre-COVID-19 pandemic levels much faster than existing listings and continued to grow in number.

Most buyer-friendly markets for new construction

When it comes to the best place to look for a newly built home in the U.S., the South is the place to be.

Not only does it have the most new construction listings, but it is also the most buyer-friendly market, boasting a higher share of newly built listings (23%) and a lower premium than the national average (8.9%).

The second-best region to buy a newly constructed home is the West, which has the lowest premium at 5.8%. What makes that market slightly less attractive overall than the South is that new builds make up a smaller share of all listings at 14.4% less than the national figure.

Meanwhile, the Northeast and Midwest are at the bottom of the pile when it comes to new builds. At just 9.9%, the Northeast has the lowest share of the market dedicated to newly constructed residential properties than the nation as a whole, with the Midwest not too far behind at 13.5%.

To make matters worse, the Northeast and Midwest have dramatically higher premiums on new construction, at 76.2% and 64.8%, respectively.

“This is due in part to a significant difference in the age of the average home in the existing segment between the two pairs of regions,” Berner explains.

The average existing home listed for sale in the South is just 39 years old and just 40 years old in the West, while the average existing home on the market is 60 years old in the Midwest and 69 in the Northeast.

Mortgage rates remain a hurdle but there is help

Mortgage rates have remained stubbornly high over the past two years, ending 2024 at 6.85% and plunging the housing market into a deep freeze, with buyers struggling to come up with the funds to buy and sellers locked into lower rates from previous years, reluctant to sell.

In a bid to break this impasse, both builders of new-construction homes and sellers of existing homes have turned to offering mortgage rate buydowns. A buydown is a type of discount on a monthly mortgage payment in which a homebuilder or seller pays a sum of cash on behalf of the buyer to the mortgage originator to lower the interest rate on the loan, decreasing the monthly bill.

New builds are much more likely to offer buydowns than existing homes. By the end of last year, 4.6% of new-construction listings came with buydown offers, compared to just 1.2% of existing homes.

Mortgage buydown rates had been rising steadily since 2022, keeping pace with the skyrocketing mortgage rates, but all that changed in the second half of last year, when the buydowns saw a downturn even as the 30-year fixed mortgage rates remained steady.

“With rates surpassing the 7% mark in January 2025, there may be opportunity for more buydowns to be offered in the market to attract prospective buyers,” predicts Berner.

There are some important differences between the types of existing listings and newly built ones offering mortgage buydowns. In the former segment, it tends to be larger and pricier homes. The typical existing home with a buydown option had a median listing price of $467,000, compared to the $390,967 existing listing price of a home without a buydown, which represents a 19.6% gap.

New construction, on the other hand, is more likely to offer buydowns on cheaper homes. The median listing price of a typical newly built house with a buydown is $457,938, compared to $439,953 of one without a buydown.

“Buyers searching for a deal on their monthly payment should look to new construction, where they can find more mortgage-rate buydowns on lower-priced homes,” Berner advises.

The buyer-friendly Western market currently has the highest share of new-construction listings with buydowns, at 6%—followed by the South, with 4.5%, which is in line with the national rate. The Midwest and Northeast have the lowest share of new builds offering mortgage buydowns, at 2.9% and 1.3%, respectively.

For this and related articles, please visit Realtor.com