New-Home Affordability Improves

New-construction activity has weakened in recent months due to a lack of buyer demand and growing material costs. Still, affordability in the new-home market continues to improve, at least compared with existing homes.

According to real estate marketing platform Realtor.com’s quarterly New-Construction Insights Report, the median list price for new homes in Q-2 2025 stayed flat year-over-year at $450,797. Comparatively, the median listing price for existing homes in Q-2 2025 grew by 2.4% year-over-year.

Compared with existing homes, new homes are more affordable on a per-square-foot basis

New-construction homes may be more expensive when looking at the sticker price alone, but they have become more affordable on a per-square-foot basis than existing homes. Because new homes are typically larger than existing homes, buyers today can often get more square footage for less money. According to the report, the typical new home in the U.S. costs $218.66 per square foot compared with $226.56 for the typical existing home. 

Metros where new-construction prices are falling the fastest

Three of the four U.S. regions saw new-construction prices falling. However, at a metro level, in 30 of the 100 largest U.S. metros, the price for new homes is falling regardless of the comparative price of existing homes in the area. These markets where new-construction prices are falling the fastest are primarily in the South, where inventory has grown the most over the past few years.

Little Rock, Ark., saw the largest year-over-year decline in new-home prices. In this city, prices fell by 15.6% year-over-year. In Austin, Texas, they fell by 8.5% year-over-year, and in Wichita, Kan., prices for new homes fell by 7.9% year-over-year. 

New-home construction has dominated the South and Mountain West housing markets over the last few years

• Where Are the Most New Homes Being Built?: A report from July 2025 shows Idaho leads the nation in new-construction acitivity. In Idaho, there are 21.2 housing units approved per every 1,000 existing homes. 
• These Cities Have the Most New-Construction Homes: A report from earlier this year shows that the majority of sales in the South and Mountain West are for new homes due to increased building activity in these regions over the last several years. In Jefferson, Ga., for instance, 57.8% of home purchases were for new homes.