BAM Key Details:
- Zillow found new homes sold for $205 per square foot in July, compared with $212 for existing homes, with new construction selling at a discount in 17 of the past 19 months.
- New homes were 19.3% cheaper per square foot in Austin and 14.4% cheaper in Raleigh and San Diego.
- New construction accounted for 12.6% of U.S. home sales over the 12 months ending July 2026.
If your buyers are under the impression new homes always cost more than pre-owned ones, you’ll want to share this with them.
New homes sold for a median of $205 per square foot in July, according to a new Zillow analysis. Existing homes sold for a median of $212 per square foot.
Not a huge difference at that level ($7). But do the math on a 2,000 square foot home, and it adds up a $14,000 premium for resale.
Zillow found new homes cost less per square foot than existing homes across the U.S. and in one-third of major markets. Many of the biggest discounts are (predictably) in Sun Belt metros where builders have been the busiest.
In markets where new construction is scarce, new homes carry a steep premium over resale homes. Supply is behind both trends.
A Reversal Years in the Making
For years, buyers could expect to pay more per square foot for a new home. Zillow’s data shows how much the market has changed.
From 2018 through 2024, new homes sold for more per square foot than existing homes in 77 of 84 months. The premium reached $25 per square foot in November 2022.
The pattern has since flipped. New homes have sold at a discount in 17 of the past 19 months, as builders face more competition for buyers.
In June, the discount reached $12 per square foot, the largest in Zillow’s analysis.
Builders have another reason to make a deal. They need to move inventory, which has made price cuts and buyer incentives a bigger part of the new-construction market.
Where New Construction Offers the Biggest Discount
The largest discounts tend to be found in markets where builders added a lot of homes during the pandemic-era building boom. Several Sun Belt metros lead the list.
Here are the markets with the largest new-construction discounts per square foot:
- Austin: 19.3% discount, with new homes at $184 per square foot and existing homes at $228
- Raleigh: 14.4% discount, with new homes at $188 per square foot and existing homes at $219
- San Diego: 14.4% discount, with new homes at $498 per square foot and existing homes at $582
- Tampa: 12.4% discount, with new homes at $198 per square foot and existing homes at $226
More construction gives builders more competition. A buyer considering one new community may have several others nearby, giving builders an incentive to keep prices competitive and offer concessions.
For agents, these numbers give buyers a reason to include new construction in their search, even when they assume a new home will fall outside their budget.
Kara Ng, senior economist at Zillow, points to the opportunity this creates for buyers:
“New homes are the overlooked opportunity more buyers should be thinking about. Buyers who assume new homes are out of their price range may be surprised at what they find. Where the most new homes have been built, buyers are in the best position to negotiate as sellers have a lot of other homes on the market to compete with. We often preach letting America build its way out of the affordability crisis, and these friendlier conditions are the payoff.”
Where New Homes Still Carry a Premium
New construction tells a different story in markets where builders have added fewer homes.
Zillow found some of the largest new-home premiums in the Northeast and Midwest:
- New York metro: 64.9% premium, with new homes at $727 per square foot and existing homes at $441
- Cleveland: 50.7% premium, with new homes at $223 per square foot and existing homes at $148
- Milwaukee: 46% premium, with new homes at $316 per square foot and existing homes at $216
- Detroit: 44.5% premium, with new homes at $239 per square foot and existing homes at $165
New construction is scarce, giving buyers fewer options. Builders in these markets also tend to focus on higher-end homes, pushing the price per square foot above the resale market.
The difference between Austin and New York helps explain why broad statements about new construction can mislead buyers. Local supply plays a major role in what a buyer will pay.
Supply Is Driving the Discount
One possible explanation for cheaper new homes is size. Builders have been constructing smaller homes on smaller lots as they try to reach buyers struggling with affordability.
Zillow says size doesn’t explain the lower price per square foot. Smaller homes spread fixed costs, including kitchens and bathrooms, across fewer square feet. That can push the price per square foot higher.
Supply provides a stronger explanation.
- The U.S. Census Bureau put new-home supply at 9.6 months in July 2026
- Compare that with 7.6 months two years earlier (2024)
- In July 2018 and 2019, supply was around six months.
More unsold homes give builders an incentive to compete for buyers. Lower prices are one tool. Rate buydowns and other incentives can help builders move homes without relying on price alone.
Resale sellers face a different set of circumstances. Existing-home inventory remains 17.1% below pre-pandemic levels, according to Zillow.
Many owners gained significant equity during the pandemic. Others have mortgage payments tied to rates around 3%, leaving them with less pressure to accept a lower offer. Owners who don’t get the price they want may also have the option of renting the property.
Zillow points to the Sun Belt as evidence of what increased construction can do for affordability. Markets that built more homes now include some of the places where new construction offers buyers the largest price-per-square-foot discounts.
The pipeline could become a concern. Permitting has slowed, which means fewer new homes could be coming behind the inventory builders are selling now.
Zillow has joined the Let America Build campaign, which calls for local policies designed to increase housing supply. The company supports zoning changes that allow more types of housing, streamlined permitting, and expanded access to accessory dwelling units and manufactured homes.
How Much of the Market New Construction Holds
New homes accounted for 12.6% of U.S. home sales during the 12 months ending in July 2026. That matches their share in 2019 after new construction reached 16.7% of sales in 2023.
The national figure hides large differences from one metro to another.
New construction accounted for:
- 37.1% of sales in San Antonio
- 33.6% of sales in Raleigh
- 2% of sales in Hartford
Texas has seen some of the largest increases in new construction’s share of sales since 2019. San Antonio gained 12.9 percentage points, Dallas gained 7 points, and Houston gained 6.8 points.
Other markets have seen new construction lose ground. New Orleans recorded the largest decline at 17.7 percentage points, followed by Baltimore at 5.8 points and Atlanta at 5.7 points.
The local share helps put new construction into context for your buyers. In a market such as San Antonio or Raleigh, leaving new homes out of a buyer’s search means excluding a large piece of available inventory.
Room to Negotiate in High-Supply Markets
Price per square foot tells part of the affordability story. Builder incentives can change the numbers a buyer faces each month.
In markets with a large supply of new homes, buyers may have room to negotiate on price or ask about incentives such as mortgage-rate buydowns. Builders competing against other new communities have a reason to make their homes more attractive to buyers.
Use Zillow’s findings as a reason to widen the search for clients who have ruled out new construction based on price alone. The size of the opportunity depends on the local market.
There’s also an important caveat to the numbers. Zillow compared the median sale price per square foot for newly built homes with the median for existing homes. The analysis combines single-family homes and condos, and the comparison numbers aren’t for identical properties.
All the more reason to get clarity for your buyers on the real prices for the neighborhood homes that check their boxes.
Still, the data does challenge a long-held assumption about new construction. In a growing number of markets, a brand-new home can come with a lower price per square foot and a builder with inventory to sell.
