Prices for New Homes Continue to Drop as Existing Rises
In the first quarter of 2025, the U.S. housing market witnessed a narrowing gap between new and existing home prices. The median price for a new single-family home decreased by 2.32% year-over-year to $416,900, marking the eighth consecutive quarter of annual declines. Conversely, existing home prices rose by 3.38% to $402,300, continuing a seven-quarter streak of increases. This $14,600 difference is significantly smaller than the five-year average gap of $26,700 and the decade average of $66,000.
Several factors contribute to this trend. Builders are adjusting to affordability challenges by constructing smaller homes on smaller lots and offering incentives, leading to more competitive pricing for new homes. Meanwhile, the limited inventory of existing homes—partly due to homeowners holding onto low mortgage rates secured during the pandemic—continues to drive up their prices. Regionally, the Midwest and South remain the most affordable, while the Northeast and West see higher prices, with the West uniquely experiencing existing homes priced higher than new ones.
