New homes have typically cost more than existing homes, so they’ve been out of reach for some home buyers. If you’re in that group, you’ll be happy to hear that new home prices have decreased, according to a new study from realtor.com®. The price gap between newly built and existing homes has fallen to a record low, giving you more choices.
More good news: “Many builders are offering incentives, like cash at closing or reduced mortgage rates, that make a major difference in upfront costs and monthly payments," says Joel Berner, senior economist at Realtor.com®. If you’ve dreamed about a home that needs less maintenance, has new appliances, and can be customized (and who hasn’t?), now could be the time to go for it.
Smaller Homes and Townhomes Expand Inventory
To help lower costs, builders are adding smaller homes and townhomes to their inventory mix, says Danushka Nanayakkara-Skillington, vice president of forecasting and analysis at the National Association of Home Builders. Townhomes made up one in five new single-family starts in the first quarter of 2025, near an all-time high, according to the NAHB.
Incentives Grow as Prices Drop
More builders are offering more enticements, including these.
Builders Offer Range of Upgrades and Perks
Two-thirds of builders offered some form of incentive in August 2025 — the highest share in at least five years, recent NAHB data shows. These range from closing-cost assistance to upgraded finishes, like decks or finished basements. “I even saw some offering free cars or a Disney Cruise if you buy now,” says Jacob Smith, a real estate pro with Northwest Vermont’s Lipkin Audette Team, part of Coldwell Banker’s Hickok & Boardman.
Some of the nation’s largest builders are putting serious money on the table. Incentives at Lennar averaged 13.3% of the sales price in the second quarter — nearly $60,000 on a $450,000 home. “Normalized incentives should be around 5% to 6%,” Lennar ex-CEO Stuart Miller said earlier this year.
PulteGroup has recently more than doubled its incentives, jumping from $18,000 to $21,000 on a $600,000 home to more than $52,000 per sale.
Mortgage Rates for New Homes Average Lower Than Resales
Another powerful incentive lately is the mortgage rate buydown. These deals can shave rates from the high-6% range to the 5% range or lower for the life of the loan. A realtor.com analysis shows buyers of newly built homes secured rates about half a percentage point lower, on average, than those buying resale homes. That translates into monthly savings of about $105 on a $400,000 home.
D.R. Horton, in select markets, has offered mortgage rate buydowns of 3.99%, mostly for buyers with a Federal Housing Administration loan who might not qualify for conventional financing.
Price Cuts Average 5%
In August, more than one-third (37%) of builders reported lowering prices, the highest share since 2022. The average price reduction is 5%, NAHB data shows.
The new-home premium compared to existing homes shrank to just 7.8% in the second quarter, an all-time low. The median price of a newly built home has held steady, listed at $450,797, while existing home prices have continued to rise, reaching $418,300, according to the realtor.com® analysis.
The South Leads the Best Deals Race
The South is seeing some of the best deals in new-home construction. The five markets with the largest drops in new-home prices, according to realtor.com®, are:
- Little Rock, Ark.: -15.6%
- Austin, Texas: -8.5%
- Wichita, Kan.: -7.9%
- Jacksonville, Fla.: -7.8%
- Cape Coral, Fla.: -7.4%
New Construction: More Choices, Fewer Problems
“There’s a strong value proposition to new construction in today’s market,” Smith says. Beyond the financial perks, buyers can often choose finishes, enjoy warranty protections, and avoid repair costs that come with older homes.
The National Association of REALTORS® Profile of Home Buyers and Sellers report found that buyers who chose new homes did so most often because they wanted to avoid renovations and problems with plumbing or electricity, followed by customization options and community amenities.
Regardless of what appeals most to you, real estate pros advise checking out newly built homes. You may well find they’re more affordable and offer more incentives than you imagined.