North Columbus News

Builders across the United States are increasingly offering incentives to attract buyers, leading to a significant narrowing of the price gap between new and existing homes. Traditionally, new homes have been priced at a premium—often 20% to 40% higher than existing homes. However, recent data shows that this difference has nearly disappeared.

Ali Wolf, chief economist for NewHomeSource and Zonda, describes this as “an unprecedented change.” She notes that it is rare for new home prices and existing home prices to be so close. In May 2025, the median price for a new home was $426,600, while an existing home was $422,800—a difference of less than $4,000. In some markets such as Raleigh, North Carolina, new homes are even 2% less expensive than comparable resale properties.

Builders are responding directly to affordability concerns by reducing prices and offering various incentives. Buddy Hughes, chairman of the National Association of Home Builders (NAHB), stated: “To help address affordability concerns and bring hesitant buyers off the fence, a growing number of builders are moving to cut prices.” According to the latest NAHB and Wells Fargo Housing Market Index survey, more than one-third of builders—37%—reduced their home prices in June 2025. This is the highest share since 2022. The average price reduction was about 5%. Additionally, 62% of builders reported offering incentives such as interest rate buydowns, upgraded finishes or assistance with closing costs.

Wolf points out that these incentives can provide additional savings for consumers. Mortgage-rate buydowns have become especially important given current mortgage rates in the high 6% to 7% range. Some builders are able to offer financing deals that reduce effective rates closer to 5%, making monthly payments more manageable for buyers.

Another trend is the increase in availability of “quick move-in” homes—properties already under construction that can be ready within 90 days or less. These homes offer buyers a faster alternative without having to wait for custom builds or make extensive design choices.

While these strategies benefit buyers by improving affordability and increasing options in a tight market with low inventory and high resale prices, they also impact builder profits. Wolf acknowledges: “It’s definitely hurting the builders. This is eroding their margin. It’s making the cost of doing business higher.” Builders are seeking ways to manage expenses by shifting operations to lower-cost areas or designing smaller or attached housing units at lower price points. Wolf adds: “There are a lot of builders going back to their architects and asking what they can do to still provide a nice home but… hit a lower price point.”

Real estate agents are increasingly advising clients frustrated by limited resale options to consider new-home construction sites where incentives may improve affordability. As Wolf suggests: “If you are a home buyer and you’re frustrated with the options in the existing home market … maybe it’s a bit outdated, needs a little work, and it’s expensive, why not look at a new home? It’s probably going to be a similar price, but it’s going to be brand new.”