With mortgage rates on a steady climb amid global economic uncertainty following the start of the war in Iran, it is hard for millions of aspiring homebuyers squeezed to the sidelines of the market by years of rising housing costs to see a way out of the ongoing affordability crisis. But there are at least two reasons why buyers should remain optimistic, based on the latest data coming out of the U.S. housing market. One is that, even as existing home prices continue inching up, the cost of buying a new home is now down 15 percent compared to four years ago, for a price tag that is even lower than that of existing properties.
That is historically unusual: normally, existing homes are cheaper than new ones. And another piece of good news comes from inventory levels, which are almost back to pre-pandemic levels nationwide, even as they remain far below the country’s needs. The U.S. housing market still faces a substantial supply deficit, despite a recent improvement in new-home inventory.
Department of Housing and Urban Development (HUD) has estimated a national shortfall of more than 1.5 million housing units, while Census Bureau data show that the new-home market remains heavily skewed toward unsold supply: in July 2026, 488,000 new homes were for sale, equivalent to 9.6 months of supply, even as builders sold homes at a seasonally adjusted annual rate of 607,000. The median price of a new home was $393,800, down 0.9 percent from a year earlier. The problem is that this inventory is not distributed where housing demand is strongest.
HUD research finds that restrictive zoning and land-use rules—including minimum lot sizes, limits on density and multifamily construction, lengthy approval processes and infrastructure requirements—can constrain housing production and raise development costs, particularly in high-demand markets. High land costs compound those constraints, making it difficult for builders to produce homes at prices attainable by middle- and lower-income buyers. This helps explain why the housing recovery has been geographically uneven: HUD notes that shortages remain especially pronounced in the Northeast, Midwest and California, while some Southern and Mountain West markets have experienced much stronger construction.
A new home cost an average of $394,000 in July against an existing home’s sale price of $434,000 in the same month, according to data from real estate platform Reventure. "That’s a 9.3 percent discount on new builds," Nick Gerli, real estate analyst and founder of Reventure, wrote on X. "Normally, it’s the other way around.
Typically, new houses sell for $40,000 more than existing houses." That is because new homes are generally bigger—2,200 square feet for new builds, according to Gerli, and 1,800 square feet for existing homes—and need less initial maintenance than older homes. This historical flip has been driven by builders’ decision to cut prices in the face of slowing demand across the country after the end of the pandemic and the sudden rise of borrowing costs in mid-2022. "Comparatively, existing homeowners have kept increasing prices despite record low demand," Gerli wrote.
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