Existing homes are still more affordable than new homes overall by $54,000, but the gap between the two is shrinking
July 22, 2024
Image: dbvirago / stock.adobe.com
On a per-square-foot basis, the average new home is now more affordable than the average existing home.
Prior to the pandemic, new-construction homes were typically priced well above existing single-family homes, but when looking at the price per square foot, this appears to no longer be the case. According to housing market platform Zillow, new-construction homes in May sold for $209.70 per square foot on average, which is just under the $213.20 rate for existing homes. This is a $3.50 per square foot discount and the largest price drop since 2018. However, when looking at the total sales price, newly built homes are still selling for about $54,000 more than existing homes.
The new construction homes of today, their lot sizes, and the share that are detached vs. condos have evolved over recent years, all contributing to changing the math when comparing prices against existing homes. Today’s new construction buyers are getting significantly smaller lots than those in prior years, and the lot-size advantage of buying existing homes is growing. Existing home sale prices are up 52% since before the pandemic, while the sale price of new builds has risen by just 26% over the same period.
