Housing Market Update
Housing and Urban Development Secretary Scott Turner is set to talk about deregulating the market to boost supply, considering unused federal land, and addressing proposed rent freezes.
In the third quarter, the affordability gap between newly built homes and existing ones has narrowed as builders are responding to a surge in demand by offering incentives.
According to Realtor.com’s report, the price per square foot for new homes is now lower than for existing homes, particularly in the South and West. Regions like these have a higher supply of new constructions, whereas the Northeast and Midwest are seeing fewer listings with smaller price reductions.
Joel Varner, a senior economist at Realtor.com, noted that builders are actively selling a substantial amount of speculative inventory as the market cools seasonally. “With readily available, move-in ready options, builders are decreasing prices and introducing incentives to attract buyers,” he added.
Rise in Water-Saving Home Features
Homes featuring water-saving technologies are seeing a dramatic increase in listings—about 290%—as buyers begin to prioritize conservation. The report emphasizes that housing inventory in the South and West is mostly back to pre-pandemic levels, with new constructions now carrying smaller price premiums, although these homes are still priced higher than those in other regions.
In contrast, new constructions remain quite pricey in the Northeast and Midwest, where the housing markets had been particularly competitive for sellers.
Trump’s 50-Year Mortgage Proposal
Typically, buyers of new homes have been required to make larger down payments compared to those purchasing existing homes, but this trend appears to be shifting. The median price per square foot for new constructions is pegged at $353 in the Northeast and $227 in the Midwest, compared to $200 in the South and $292 in the West. In the existing home market, prices are $204 in the South, $320 in the West, $271 in the Northeast, and $168 in the Midwest.
Barner stated, “New homes are becoming more competitive with existing homes, offering more affordability per square foot. In a landscape where affordability is critical, new homes provide more appealing sales prices and financing options that help ease down payment and monthly payment challenges.”
Notably, the rate of price reductions for new homes reached an all-time high of 15.1% for the third quarter of 2025. However, reductions are less frequent in densely populated areas.
Property Tax Savings by State
Price decreases are more prevalent in the South and West, with 16.6% of new properties in the West and 15.9% in the South experiencing reductions. Comparatively, only 7.8% of new constructions in the Northeast saw price drops, along with 12.2% in the Midwest. A recent Realtor.com survey indicated that, with rising mortgage rates, promotions like mortgage rate buydowns are being frequently offered to entice buyers into new constructions.
In the last quarter, the average 30-year mortgage rate for existing homebuyers was 6.26%. For new homebuyers, it was lower at 5.27%, representing a decrease of 99 basis points in the third quarter—significantly more than the prior two quarters’ declines.
Down Payment Trends
Interestingly, down payments for new homes are on the decline, despite the historical trend of larger down payments in this segment. In the most recent quarter, new home buyers enjoyed price reductions of 15.7%, while existing home buyers saw price reductions of 17.8%. This is a slight shift from the previous year, where new home buyers had a higher price reduction rate compared to existing home buyers.
