After decades of paying a premium for new construction homes, builders are adjusting how they build to control costs, and it shows. New homes are now selling for about the same, or even less, as existing ones.
For the fourth consecutive quarter, the median price of existing homes ($404,600) exceeded the median price of new single-family homes ($403,200), according to an NAHB analysis of U.S. Census Bureau and National Association of REALTORS® data from the first quarter of 2026..
“They’re trying to simplify the process in many ways,” said Cotality Chief Economist Selma Hepp. “They’re putting in fixtures and finishes that are much more affordable. They’re using simpler floor plans — where builders come up with a book of floor plans and just offer those. All of these things are aimed at helping to lower the costs of new construction.”
For instance more than a third of builders reported cutting prices in June, with an average price reduction of 6%,according to NAHB and Wells Fargo’s builder sentiment index. In addition, 62% of builders reported using sales incentives, such as mortgage rate buydowns or closing cost assistance.
“The advantage that home builders have over sellers of existing homes is that they’ve been able to provide mortgage rate buydowns and other incentives that make it a little more affordable for potential home buyers,” said Hepp citing colatility’s research, indicating that on average mortgage rate buydowns have gone from less than 10% of sales in newly built homes to now 70% to 80%.
On average, new homes carry less long-term financial burden due to lower energy costs and fewer repairs according to a new study from Realtor.com®. Buyers of 10-year-old homes saved an average of about $25,000 compared to 20-year old homes.
Why new construction homes cost so much:
NAHB reports that on average, government regulations at the federal, state and local levels add $131,734 to the cost of a new single-family home, equal to about 26% of the average new-home sales price. Of that total, $84,939 comes from regulatory costs incurred during the construction phase, including building codes and permit requirements, while $46,795 is tied to regulations related to land development, such as zoning, approvals and site preparation.
These costs have grown significantly since 2021 when regulator costs accounted for about $93,870 per home. Now, that figure has climbed more than 40% to $131,734.
Builders cover costs for:
- purchasing the site for construction
- securing permits and zoning approvals
- connecting water, sewer, electricity and other utilities
- meeting building codes and regulatory requirements
- engineering, design and environmental reviews
- carrying the property and financing costs while waiting to build
“Excessive regulation is deepening the nation’s housing affordability crisis and making it harder for builders to deliver the affordable, attainable housing that our nation sorely needs,” said NAHB Chairman Bill Owens.