New Homes Cheaper Per Square Foot Than Existing Ones in Many Markets
Newly built homes now cost less per square foot than existing homes in one-third of major U.S. markets, a Zillow analysis finds.
Newly constructed homes are undercutting existing ones on a per-square-foot basis across a growing share of the U.S. housing market, according to a new Zillow analysis. Nationally, new homes carry a median price of $205 per square foot, compared with $212 for previously owned properties — a reversal of the long-standing premium typically associated with new construction.
The trend is most pronounced in Sun Belt metros where homebuilders have ramped up activity in recent years. Heavy construction volume in those regions has created competitive pricing conditions, giving buyers in those markets an unusual opportunity to purchase brand-new homes at a cost advantage over comparable resale properties.
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The dynamic reflects broader shifts in the U.S. housing landscape. Builders have increasingly offered incentives — including mortgage rate buydowns and price cuts — to move inventory, while owners of existing homes have often held firm on asking prices despite elevated mortgage rates constraining demand. That divergence has gradually eroded the new-construction premium in a significant portion of major markets.
For prospective buyers weighing their options, the data suggests that new construction deserves closer consideration than conventional wisdom might indicate, particularly in high-supply Sun Belt cities. The value proposition has quietly shifted in ways that aggregate national statistics can obscure.
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