In One-Third of Major Markets, New Homes Cost Less Per Square Foot Than Existing Homes

Key findings:

• Newly built homes sell for a median of $205 per square foot nationally, below the $212 median for existing homes, a new Zillow analysis finds.
• Many of the markets with the biggest discounts for new homes are high-supply Sun Belt markets where builders have been most active: new homes are 19% cheaper per square foot than existing homes in Austin, 14% cheaper in Raleigh and San Diego, and 12% cheaper in Tampa.
• Nationally, new homes make up 12.6% of home sales over the past year. That share ranges from more than 1 in 3 sales in San Antonio (37.1%) and Raleigh (33.6%) to 2% in Hartford. 

Buyers who assume new homes are out of their price range may be surprised at what they find. New homes are now typically a better value than an existing home nationwide, and in one-third of major metro areas. 

New homes sold for a median of $205 per square foot in July, below the $212 median for existing homes. This is a reversal from recent years, when new homes sold for more per square foot than existing homes in 77 of 84 months from 2018 to 2024. The price per square foot premium for new homes peaked at $25 in November 2022. 

New homes have been selling at a discount relative to existing homes in 17 of the past 19 months with builders more willing to cut prices and offer incentives to move inventory. The deepest discount was seen in June at $12 per square foot. 

This relative discount for new homes is usually biggest where construction surged during the pandemic boom, particularly in the Sun Belt. The deepest discounts are in Austin (19.3% price per square foot discount), Raleigh (14.4%), San Diego (14.4%) and Tampa (12.4%). Discounts run deeper in these markets as competition gives builders more reason to build more affordable homes and offer incentives to buyers.

The opposite is true where new construction is scarce, including in the New York metro area (64.9% price per square foot premium), Cleveland (50.7%), Milwaukee (46%) and Detroit (44.5%). Where inventory remains locked up and new construction faces more hurdles, builder offerings lean toward the higher end and carry a premium.

Reasons why

New homes being built today are typically smaller homes on smaller lots, but that does not explain why these homes cost less per square foot. If anything, this pivot toward more affordable, denser homes should raise the price per square foot since smaller homes spread fixed costs like kitchens and baths over fewer feet.  

This tells us that supply is the primary driver. The U.S. Census Bureau put the supply of new homes at 9.6 months in July 2026, up from 7.6 months just two years earlier and well above the roughly six months recorded in July 2018 and 2019. High levels of standing inventory are prompting builders to offer lower prices and incentives like rate buydowns. However, permitting has slowed, pointing to a thinner pipeline ahead.

While the supply of new homes sits well above pre-pandemic norms, inventory of resale homes remains 17.1% below where it was before the pandemic. Existing home sellers are generally in a strong financial position, benefitting from significant equity during the pandemic and low monthly payments locked in when mortgage rates were around 3%. There is less incentive for a resale seller to cut their price, especially when many have the option to relist their home as a rental if they do not receive an acceptable offer from a buyer.  

New construction’s footprint

Nationally, newly built homes account for 12.6% of all home sales over the 12 months ending July 2026. That’s the same share as in 2019, representing a return to pre-pandemic norms after peaking at 16.7% in 2023. 

The share of new home sales over the past 12 months varies widely by market, ranging as high as 37.1% in San Antonio, and as low as 2% in Hartford. Compared to 2019, new construction has captured a growing share of the market in major Texas metros. The share of sales made up by new homes is up 12.9 percentage points in San Antonio, 7 points in Dallas and 6.8 points in Houston. Markets where new construction has lost share since 2019 are led by New Orleans (down 17.7 percentage points), Baltimore (5.8) and Atlanta (5.7). 

Methodology

Figures compare Zillow's median sale price per square foot for newly built homes against the same measure for existing homes. Single-family homes and condos are combined. Price per square foot reflects homes sold in each segment and is not a like-for-like comparison of identical homes.

*Table ordered by market size

**Marked “N/A” because data for at least one month during the period is unavailable