Builder down payment and rate incentives of nearly a full point help further ease affordability pressures
AUSTIN, Texas, Nov. 25, 2025 /PRNewswire/ — Newly built homes are becoming increasingly competitive with existing homes on both price and financing, according to the latest Realtor.com® New Construction Quarterly Report. The data shows that the new construction price premium – the percent difference between median list prices for new and existing homes – fell to its lowest third-quarter level on record in Realtor.com®’s data history. At the same time, builders’ incentives continue to meaningfully reduce mortgage rates and down payment requirements, with new-construction buyers last quarter paying nearly a full percentage point less on a 30-year mortgage than buyers of existing homes.
“New construction continues to play a critical role in expanding housing options and easing affordability challenges for buyers. Builders are responding directly to market conditions and the financial barriers buyers face, from high monthly payments to large down payments, and are creating compelling opportunities to shop new homes in today’s market,” said Realtor.com® Chief Economist Danielle Hale. “But many of these benefits are regional. In parts of the South and West, where new construction is more plentiful, buyers are seeing the greatest pricing flexibility and incentives, while in the Northeast and Midwest, new homes remain a more limited, premium option.”
Despite notable headwinds for housing in 2025 – a softer labor market, weaker buyer demand, and higher input costs from labor shortages and new tariffs – new construction is a relative bright spot for home shoppers. Builders are responding to buyers’ biggest hurdles with competitive pricing strategies and financing promotions that, in many cases, make new homes as attainable as existing ones.
Builder incentives push mortgage costs down, narrowing the gap between new and existing homesMortgage rate buydowns and below-market financing remain the most common builder incentives offered to shoppers on Realtor.com®, and their impact on affordability is substantial. In Q3 2025, the average mortgage rate for new construction buyers was 5.27%, compared to 6.26% for existing-home buyers. The 99-basis point gap, the widest in recent years, likely reflects elevated use of late summer rate promotions. Down payments were also lower, averaging 15.7% for new homebuyers compared to 17.8% for existing-home buyers, a reversal of historical norms.
Combined, these factors bring monthly payments for new and existing homes nearly in line, making a newly built home – complete with modern layouts, energy efficiencies, and lower maintenance – accessible for roughly $30 more per month while requiring less cash upfront.
“Builders’ incentives are giving buyers great deals on mortgage rates, but there are tradeoffs,” said Joel Berner, senior economist at Realtor.com®. “When buyers pay closer to full price and put less money down, they finance more of the purchase, which raises the risk of ending up underwater if home values fall. Even with today’s improved affordability in new construction, it’s important to weigh these incentives against their longer term financial picture.”
New construction prices stabilize as existing home prices riseNationally, the median listing price for newly built homes in Q3 2025 was $451,337, holding steady year over year (+0.2%) and down -4.0% from the 2022 peak. Meanwhile, existing-home prices continued to rise, reaching $409,667, up 1.6% year-over-year and 3.9% above Q3 2022.
Because new builds tend to be larger, adjusting for size reveals even stronger affordability trends. On a price-per-square-foot basis, new construction has been less expensive than existing homes for most of the past year, driven largely by trends in the South and West, where new home supply is plentiful and competition among builders is highest. However, regional disparities are stark; new construction remains significantly more expensive per square foot in the Northeast and Midwest, where fewer new homes are built and inventory is tighter.
Inventory growth and pricing pressure push new construction premium to record low, price reductions hit all-time highSteady new construction activity has helped replenish historically low post-pandemic inventory levels. Existing-home listings have also surged over the last two years, and as a result, the share of new construction listings fell to 16.7% of all for-sale homes in Q3 2025, down from its peak of 22.4% in Q1 2023.
The new-construction price premium also fell last quarter, to 10.2%, the lowest on record for Realtor.com®, even as new construction supplies fell. This is a rare dynamic, since falling price premiums usually signal growing inventory. Builders are aggressively pricing some new homes to attract buyers, with trends varying by region. New builds carry a lower single-digit premium and see more price reductions in the South (6.3%) and West (0.9%), where supply has largely recovered. By contrast, price premiums in the Northeast (61.6%) and Midwest (55.8%), where new construction remains scarce and expensive, continue to position new homes as a premium product.
Nationwide, 15.1% of new construction listings saw price reductions in Q3 – an all-time high. New home reductions were most common in the South (15.9% vs 18.7% for existing) and West (16.6% vs 18.7% for existing) and less frequent in the Midwest (12.2% vs 17.1% for existing) and Northeast (7.8% vs 12.1% for existing).
MethodologyRealtor.com® housing data as of September 2025. Listings include the active inventory of newly built single-family homes and condos/townhomes/row homes/co-ops for the given level of geography on Realtor.com®. Realtor.com® data history goes back to July 2016. Mortgage rate and down payment data come from the Realtor.com® public records database.
About Realtor.com®Realtor.com® pioneered online real estate and has been at the forefront for over 25 years, connecting buyers, sellers, and renters with trusted insights, professional guidance and powerful tools to help them find their perfect home. Recognized as the No. 1 site trusted by real estate professionals, Realtor.com® is a valued partner, delivering consumer connections and a robust suite of marketing tools to support business growth. Realtor.com® is operated by News Corp [Nasdaq: NWS, NWSA] [ASX: NWS, NWSLV] subsidiary Move, Inc.
Media Contact: Sara Wiskerchen, [email protected]
SOURCE Realtor.com
