New homes undercut resales in major Sun Belt markets

New construction has become less expensive by area than resale housing nationwide, reversing the pattern buyers usually encountered between 2018 and 2024. Zillow’s medians are $205 for each square foot in a newly built property and $212 in an existing one. The difference is greatest in builder-heavy Sun Belt cities. New homes hold a 19.3% advantage in Austin, 14.4% in Raleigh and 12.4% in Tampa. Discounts have appeared during 17 of the latest 19 months.

Abundant builder inventory is driving the change. Census data put July’s new-home supply at 9.6 months, compared with 7.6 months two years earlier and roughly six months during July 2018 and 2019. Builders have responded to unsold properties with price reductions and buyer incentives. Resale owners face a different calculation: available existing homes remain 17.1% short of pre-pandemic levels, while owners carrying mortgages near 3% can rent their properties instead of accepting lower offers.

The pattern varies sharply by metro. New builds retain large per-area premiums in the New York region, Cleveland, Milwaukee and Detroit, ranging from 44.5% in Detroit to 64.9% around New York. Looking at the 12 months ending in July, new construction represented 12.6% of national sales, below the 16.7% peak reached in 2023.