Why New Construction Might Be The Move
There’s a trend taking hold in real estate right now: more buyers are choosing newly built homes. And it’s not just about getting the latest technology or modern floor plans. It’s because they may be able to get a better deal.
Builders are offering serious incentives today, and people are jumping on them. In fact, new home sales just hit their highest level in over two years (see graph below):
More Incentives Than Ever From HomeBuilders
Currently, the market is experiencing an unusually high number of newly constructed homes for sale—more than any time in recent years. This surge in inventory benefits buyers in two significant ways: it expands the range of available options and pressures builders to sell existing homes before starting new projects.
As a result, many builders are now providing a variety of attractive incentives, including:
Mortgage rate buydowns: These reduce your monthly mortgage payments, making homeownership more affordable.
Price reductions: Lower prices aim to make purchasing a new home financially attainable for more buyers.
Assistance with closing costs and upgrades: Some communities offer help covering closing fees and additional home improvements at no extra charge.
Data from Zonda reveals that nearly 60% of new home communities offer incentives on homes that are yet to be built, while over 75% provide similar offers on quick move-in homes, which are already completed and ready for immediate occupancy.
Real estate analyst Nick Gerli highlights this trend, noting that builders have reduced prices by approximately 13% from their peak and are supplementing these reductions with generous mortgage rate buydowns. This adjustment reflects builders responding to evolving market conditions and increased competition.
The key insight for buyers is that builders are highly motivated to sell their current inventory. Consequently, purchasing a newly built home now can mean access to both lower prices and more favorable financing terms. If affordability has been a barrier in the past, these incentives may offer a viable opportunity to enter the housing market.
You Have More New Options Than Usual
The current increase in new homes on the market means you have more choices than in previous years. Whether you prefer a move-in ready home or want to customize a new build, there are likely more options in your area than you might expect. While new home availability has risen nationwide, some regions offer even greater opportunities to find better prices. Census data provides an overview of the areas experiencing the largest growth in newly constructed homes (refer to the graph below):
The South and West currently have a higher availability of new homes, which means builders in these areas might be more open to negotiations. However, this opportunity is likely temporary. Recent data indicates that builders are slowing their production to prevent an oversupply of homes on the market. Robert Dietz, Chief Economist at the National Association of Home Builders (NAHB), notes that the pipeline for single-family homes has narrowed, with 621,000 homes under construction—a 1% drop in July and 3.7% decrease compared to last year. This is the lowest level since early 2021, as builders pull back on new supply.
Looking ahead, the number of new homes on the market could decrease as builders prioritize selling existing inventory before starting new projects. Consequently, this period might represent one of the best chances to purchase a new home in recent years.
In summary, with builders reducing prices and potentially offering assistance to lower monthly payments, buyers should not overlook this opportunity. To navigate this market effectively, it’s advisable to work with a real estate agent who can help compare incentives from different builders and negotiate the best possible deal.