Historically, newly constructed properties in the U.S. have tended to cost more in average than existing ones. However, new insights into this data paints a more nuanced picture of the pros and cons of new constructions.
For example, in the charts below, although the newly constructed homes cost more than the existing homes, they are also larger, making them less expensive per square foot than older constructions. However, this is only true on a national scale. In both the Midwest and Northeast regions of the U.S. existing homes are cheaper per square foot than their new counterparts.
Nationally, as the new construction share of listings on the market has lowered, its premium has also fallen, now at 10.2%, the lowest third-quarter measure in the referenced data set’s history. This relationship is unexpected, as typically, a larger supply is what leads to lower prices. However, the data shows that builders of new constructions may be more motivated sellers, marketing and pricing their properties more aggressively. This is also reflected in the percent of newly-built listings that have had price knock-downs this quarter: 15.1%.
As the market shifts nationally towards lower-priced newly-constructed buildings, the questions remains as to whether this trend will pick up speed in the Northeast and Midwest regions.
