New-Home Prices Fall to 4-Year Low as Builders Deepen Discounts

Prices for newly built homes fell to a four-year low in the fall as builders cut prices, according to a report delayed by the government shutdown.

The median sales price for new homes that went under contract in October was $392,300, down 8% from a year earlier and the lowest level since 2021, the U.S. Census Bureau reported on Tuesday.

New-home prices have been trending down since late 2022, after the affordability crisis priced many potential buyers out of the market. Homebuilders responded by cutting prices and boosting incentives.

This month, 40% of builders reported cutting prices, while 67% reported using sales incentives such as mortgage rate buydowns, according to the leading survey of homebuilder sentiment.

"Affordability is the main constraint in the housing market currently, and builders are doing their part to bring more buyers into the fold by delivering low-priced new inventory to the market in a way that the existing home segment simply can’t," says Realtor.com® Senior Economist Joel Berner. "Combined with lower mortgage rates, it is an especially attractive time for buyers to be searching for a newly built home."

Prices for existing homes remain much stickier, and continue to rise. Consequently, new homes have actually been cheaper than previously owned homes since June, reversing longstanding trends.

"Two main things are at play here: builders are more motivated sellers than regular homeowners, many of whom are reluctant to cut prices and would rather delist their home than sell below their target, and builders continue to deliver smaller and more affordable new homes in more affordable areas," says Berner.

Lower prices and rates drive higher sales

Sales of new single-family houses were at a seasonally-adjusted annual rate of 737,000 in October, little changed from the prior month but up 19% from a year earlier.

Transactions rose as falling mortgage rates and prices both contributed to making new homes more affordable for prospective homebuyers.

Mortgage rates averaged 6.25% in October, down from 6.43% in October 2024, according to Freddie Mac.

With a 10% down payment, that means the typical monthly mortgage payment on new homes sold in October was about $2,170, about $240 cheaper than new homes purchased a year earlier.

Regionally, the South (+42.1%) and Midwest (+21.3%) drove the uptick in sales volume year over year, while the Northeast (-40.0%) and West (-24.8%) lagged behind.

"A strong majority of new home sales take place in the South, so the strength in this region can mask some weakness in others," says Berner. "Even on a non-seasonally adjusted basis, October was the strongest month of 2025 for the South in terms of the number of new homes sold."

The new residential sales report for October was delayed by the federal government shutdown that month, and also included preliminary data for September.