When it comes to home sales, there's usually a significant price gap between a newly built home and an existing home, with new homes commanding a price premium, but in Q2 and Q3 of 2024 that wasn't the case. Using data from the U.S. Census Bureau and the National Association of Realtors (not seasonally adjusted), the National Association of Home Builders' Eye On Housing blog reports that—for the first time since 1989—the median price for an existing home actually exceeded the price of a new home in those two quarters. And the price gap was slim in Q4 2024, with a median sales price of $419,200 for a new single-family home and $410,100 for an existing home.
For comparison, the average price premium in 2024 of new-home sales over existing-home sales was $8,725; in 2023 it was $33,750; and the 10-year average is $50,657.
There are several factors as to why new and existing homes are selling at similar price points. Tight inventory continues to push up prices for existing homes, as many homeowners who secured low mortgage rates during the pandemic are hesitant to sell due to current high interest rates.
Meanwhile, new home pricing is more volatile – prices change due to the types and locations of homes being built. Despite various challenges facing the industry, home builders are adapting to affordability challenges by selling smaller lots, constructing smaller homes, and offering incentives. Read more
