Builder discounts and surging Sun Belt supply are making new homes the better value play across the US
For the first time in years, new construction homes in the United States offer better value per square foot than existing homes. That's a reversal that brokers in high-supply Sun Belt markets should be bringing to cost-sensitive clients right now.
A Zillow analysis finds that newly built homes now sell for a national median of $205 per square foot, below the $212 median for existing homes.
The data marks a structural shift in a market where new construction commanded a premium over resale properties in 77 of 84 months between 2018 and 2024.
Sun Belt supply tips the scales
The discount is deepest in markets where builders have been most aggressive. Austin, Texas, shows a 19.3% price-per-square-foot advantage for new homes over existing ones; Raleigh, North Carolina, records a 14.4% gap; and Tampa, Florida, comes in at 12.4%.
New construction accounts for more than one in three home sales in San Antonio (37.1%) and Raleigh (33.6%) over the 12 months ending July, against a 12.6% national average.
The shift has accelerated. New homes last commanded a significant premium in November 2022, when buyers paid $25 more per square foot than for existing homes.
Since then, the dynamic has reversed — new homes have sold at a discount in 17 of the past 19 months, with the widest gap reaching $12 per square foot in June 2026.
Builders sitting on elevated inventory have cut prices and layered in incentives to move product.
"New homes are the overlooked opportunity more buyers should be thinking about," said Kara Ng, senior economist at Zillow.
"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."
Edward Seiler of the Mortgage Bankers Association says monthly mortgage payments eased in August as smaller loan sizes helped offset higher rates, although affordability continues to vary significantly across markets.https://t.co/PdtWg8gCic
— Mortgage Professional America Magazine (@MPAMagazineUS) September 25, 2026
Supply is the whole story
The structural driver is inventory. The US Census Bureau reported new home supply at 9.6 months in July, up from 7.6 months two years earlier and well above the roughly six months recorded in July 2018 and 2019.
Existing home inventory, by contrast, sits 17.1% below pre-pandemic levels. Sellers locked into mortgages at around 3% face little incentive to reduce prices — many can relist as a rental rather than accept a discounted offer.
Where supply is constrained, new construction still carries a steep premium.
The New York metro area records a 64.9% price-per-square-foot advantage for new homes over existing ones; Cleveland shows a 50.7% gap, while Milwaukee and Detroit register premiums of 46% and 44.5%, respectively, per Zillow.
The mortgage industry's 2026 outlook on housing affordability and rate projections suggests that any further Fed easing could accelerate buyer activity in markets where new construction already offers the best value per square foot.
How new housing legislation may fall short on solving borrowers' affordability challenges signals that supply-led pricing gains in markets like Austin and Raleigh are unlikely to spread quickly to supply-constrained metros without meaningful zoning and permitting reform.
New construction's national market share has returned to pre-pandemic norms. Newly built homes accounted for 12.6% of all US sales in the 12 months through July, down from a peak of 16.7% in 2023, according to Zillow.
In high-supply Texas markets, the share has grown substantially. San Antonio's new home share is up 12.9 percentage points compared to 2019, Dallas up 7 points, and Houston up 6.8 points.
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