In recent times, the housing market in the United States has experienced a historically rare phenomenon where newly built homes are being sold at prices lower than existing homes. According to the latest official data from the United States, the median sale price for new homes in June was $407,200, which is approximately $28,000 lower than existing homes, representing a 6.5% difference. This marks the largest price inversion in 25 years. In July, the gap narrowed to nearly $19,000 (about 4%), still significantly higher than previous years, and has now seen four consecutive months of price inversion, setting a new record for the longest streak in history.
Traditionally, newly built homes have always been priced higher than existing homes for various reasons such as fewer maintenance issues, brand new appliances, contemporary designs that appeal to current tastes, and the ability to be customized according to the buyer’s needs. However, in recent months, there has been an unprecedented reversal of this trend in the United States, with newly built homes being sold at significantly lower prices than existing homes.
Experts attribute the price inversion to several factors, with the main reason being a surge in supply of new homes leading to a continuous decline in prices since reaching their peak at the end of 2022, while existing home prices have continued to reach new highs.
On August 25th, the U.S. Census Bureau and the Department of Housing and Urban Development jointly released the “New Residential Sales Report,” revealing that as of July 2025, there is a inventory of 499,000 new homes, equivalent to a 9.2 months’ supply, marking a 16.5% increase from July 2024 and approaching levels last seen in October 2007.
As the supply continues to rise, the prices of new homes keep dropping. The report shows that in July, the sales of new single-family homes decreased from 656,000 units in June to 652,000 units, representing an 8.2% decrease from the same period last year. At the same time, the median sales price of new homes has dropped by 5.9% over the past 12 months to $403,800, reaching the lowest level in eight months.
Joel Berner, Senior Economist at Realtor.com, pointed out: “The situation where new homes are cheaper than existing homes is very rare, and the difference is not only in the pricing aspect. Many builders are offering additional incentives such as cash subsidies and lower mortgage rates, further easing the burden on buyers. In other words, the actual purchase cost of newly built homes may be even lower than reflected in the data.”
In response to market demands, builders have introduced smaller-sized units to attract buyers with limited affordability. Despite this, the average size of newly built homes still surpasses existing homes. When calculated per square foot, the average price of newly built homes in the United States is $218.66, while existing homes are at $226.56.
It is worth noting that since 1999, there have been only 10 instances where newly built homes were priced lower than existing homes, with 8 of those occurrences happening in the last 15 months. Since April this year, price inversion has been consistent every month, reaching a peak of 6.5% in June.
Another reason for the inversion is that newly built homes are more prevalent in the relatively affordable southern regions of the United States, a trend that is not new.
Furthermore, the difference in mindset between builders and owners of existing homes is also a contributing factor to the price inversion. Builders, who hold large inventories, have to actively reduce prices to clear stocks, while homeowners with only one property often choose to withdraw listings and wait rather than lowering prices, leading to a standstill in the market.
Berner noted that this phenomenon also raises questions about the efficiency of the existing home market, asking, “If prices of existing homes do not decrease despite an oversupply situation, can they truly reflect market realities?”
Looking ahead, if homeowners eventually concede, existing home prices may see a correction due to softening market conditions. If homeowners hold firm on prices, the market could remain in a stalemate until mortgage rates drop or incomes increase, prompting buyers to reenter the market.
Experts recommend that buyers take advantage of this rare opportunity before any potential market changes by purchasing newly built homes at discounted prices.