Why Old Homes Are Suddenly More Expensive Than New Homes

Forbes

For most of the last 50 years, new homes have cost more than existing ones, nationally. Thanks to builder strategies, shifting home designs and a new construction glut the trend has flipped.  Read the full story on Forbes: https://www.forbes.com/sites/brandonkochkodin/2025/08/27/heres-why-old-homes-suddenly-cost-more-than-shiny-new-ones/  Subscribe to FORBES: https://www.youtube.com/user/Forbes?sub_confirmation=1  Fuel your success with Forbes. Gain unlimited access to premium journalism, including breaking news, groundbreaking in-depth reported stories, daily digests and more. Plus, members get a front-row seat at members-only events with leading thinkers and doers, access to premium video that can help you get ahead, an ad-light experience, early access to select products including NFT drops and more:  https://account.forbes.com/membership/?utm_source=youtube&utm_medium=display&utm_campaign=growth_non-sub_paid_subscribe_ytdescript  Stay Connected Forbes newsletters: https://newsletters.editorial.forbes.com Forbes on Facebook: http://fb.com/forbes Forbes Video on Twitter: http://www.twitter.com/forbes Forbes Video on Instagram: http://instagram.com/forbes More From Forbes:  http://forbes.com  Forbes covers the intersection of entrepreneurship, wealth, technology, business and lifestyle with a focus on people and success.

Transcript

00:00Today on Forbes, here's why old homes suddenly cost more than new ones.

00:06Something bizarre is happening in the U.S. housing market.

00:10At the national level, new homes are selling for less than existing ones.

00:15In June, the median existing home sold for $441,500,

00:20while the median new home went for $401,800.

00:25Since 1968, 690 months in total, new homes have only undercut existing ones 22 times.

00:34From June 1982 to May 2024, it happened just twice,

00:39and the 1990s never saw the inversion happen at all.

00:42Yet, since May 2024, this flipped market has popped up 7 times,

00:48happening every month from April through June of this year,

00:51the month with the latest data we've got.

00:53June's gap was a record-breaker.

00:56New homes sold for 9% less than existing ones,

00:59smashing the previous record 3% discount.

01:03When an economist sees numbers that look backward,

01:05the instinct is to look for what's missing.

01:08Eric Fox, chief economist at Veros Real Estate Solutions,

01:12a firm that provides housing market analytics and forecasting,

01:15puts it this way.

01:16If a chart doesn't make sense,

01:18there's usually a hidden variable that explains it.

01:20A good place to start is to look at the particulars,

01:24if only to understand what isn't happening.

01:27Kevin Weingarten has a buyer under contract for a three-bedroom,

01:31two-and-a-half-bath townhome in Chalfont, Pennsylvania.

01:33It's 30 miles from Center City, Philadelphia.

01:37Far enough from Trenton, the closest New Jersey transit station to New York City,

01:41it avoids the long-distance commuter crowd, keeping the price down.

01:45Built by Fox Lane Homes, the 2,000-square-foot unit's sales price is $620,000.

01:50Weingarten has been selling homes in the Philadelphia suburbs for 13 years,

01:56after spending years as a project manager for a builder,

01:59giving him a clear-eyed view of both sides of the housing market.

02:03He says good luck finding a comparable resale closer to Chalfont.

02:07Existing townhomes, when they pop up,

02:09sell 10% to 15% cheaper than new construction.

02:13But they're rare, and inventory stays tight.

02:16That's what you'd expect.

02:18All else being equal, a new home next to an existing one

02:21will almost certainly cost more.

02:24New homes command higher prices with their quartz countertops,

02:27brand-new appliances, fresh paint,

02:29and none of the carpet stains or musty smells that can haunt a resale.

02:34So if there isn't a sudden preference for old over new,

02:37and real estate agents like Weingarten say there isn't,

02:40then what explains the anomaly in the aggregate national-level data?

02:43The first clue has to do with what builders are doing.

02:48The National Association of Homebuilders says that since June 2024,

02:5260% of homebuilders were using sales incentives,

02:55and 30% lowered their prices.

02:58Incentives can mean interest rate buy-downs,

03:00help with closing costs,

03:02or free upgrades that lower the effective price

03:04without changing the sticker.

03:07Existing homeowners are making concessions too,

03:09though less often.

03:10Redfin, the online real estate brokerage,

03:13found that nearly 40% of home sales in the first quarter of 2025

03:16involved sellers covering something,

03:19whether repairs or closing costs.

03:22In practice, that means the median sales price of new homes

03:25understates the actual discount,

03:27because many concessions don't show up in the data.

03:30Daryl Fairweather, chief economist at Redfin,

03:33says,

03:33Builders overbuilt during the pandemic.

03:37Builders don't have the luxury of sitting on 4% mortgages

03:40like those who bought homes from 2011 through 2022 do.

03:44They need to move inventory,

03:46so they cut prices and offer deals to get homes off their books

03:49and into the hands of people willing to pay today's 6%-plus mortgage rates.

03:54That makes builders more flexible on price.

03:57Lawrence Yun, chief economist at the National Association of Realtors,

04:01says that existing homeowners are up 49% since before the pandemic.

04:06That equity and homeowners clinging to their existing sub-4% mortgages

04:10makes them reluctant to cut their asking prices.

04:13Instead, they stay put, limiting supply.

04:17Inventory for existing homes is about four months,

04:19while new home inventory was more than double that in June, Yun says.

04:23Builders, facing that supply glut, have had to adjust.

04:29More incentives and aggressive pricing are the result.

04:32Existing owners, locked into cheap mortgages, are sitting tight.

04:36The odd price inversion is the byproduct.

04:40For full coverage, check out Brandon Kokoden's piece on Forbes.com.

04:44This is Kieran Meadows from Forbes.

04:48Thanks for tuning in.

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