For the second time since 1982, newly-built houses are less expensive than existing homes. In 2024, the median sales price of recently constructed homes dropped 4.6% compared to the year prior, while the price of previously owned homes rose 3.1%. 62% of builders also offered sales incentives, further lowering prices. Now could be a good time to opt for a newly constructed home.
Why is this shift happening?
Newly built homes are now cheaper than existing ones due to the “lock-in effect”. This means that homeowners are resistant to letting go of their low interest rates, leaving homebuyers with fewer affordable housing options.
Here are some benefits of new builds:
Lower Insurance Rates
Since recently constructed homes are built to follow modern-day code and standards, insurance costs should be much less since there’s a lower risk of the house having issues. On average, the insurance for a house built in 2020 or later is 29% cheaper than insurance for a house built in the 1960s.
Fewer Renovation Costs
Over 50% of people want to renovate their existing homes, which consumes time and resources. Choosing a newly built house cuts out the need for immediate renovations because the buyer can address the changes they want during the home building process. As the average home renovation costs over $50,000 and can take months to complete, choosing a recently constructed home can save buyers significant money and time.
Lower Energy Bills
Newly constructed homes are made to be more energy efficient with the use of modern windows, insulation, and lighting technology. Homeowners can also add efficient home solutions such as Cool roofs or advanced house framing to reduce energy use.
Fewer Repair Costs
Hard-to-source materials may be needed to fix an older home, increasing expenses and the time needed to make repairs.
Custom Features
Newly constructed homes give buyers the freedom to customize their houses to their needs. Features like special laundry chutes, specific countertops, or custom audio and light systems are all possibilities, depending on the developer.
Things to Consider Before Building
Build Time
Building a home from scratch can take around 6.5 months to complete. Luckily there are options to customize a home with a pre-existing foundation to help save on build time.
Property Taxes
Depending on the neighborhood, recently constructed homes may come with higher property taxes. These are calculated with the assessment of land value, construction costs, permits, and upgrades. Property taxes may be higher in the first few years but can decrease after.
Newly built homes offer many benefits that can suit a variety of lifestyles. Before committing to a new home, buyers should avoid making rushed decisions and evaluate their personal needs to ensure that it’s the best option for them.