The housing market offered a rare glimmer of hope for buyers in early 2025: Newly built home prices dropped in nearly one-third of the nation’s top 100 metro areas, according to Realtor.com®’s New Construction Quarterly Report. This shift is particularly encouraging for first-time buyers and those struggling to keep pace with rising mortgage costs.
Smaller Homes, Lower Prices — And Some Incentives, Too
Builders have been actively addressing affordability by downsizing new builds and trimming prices. According to Realtor.com Chief Economist Danielle Hale, “Builders are delivering smaller homes at lower prices and often offering financial incentives that make monthly payments more manageable.”
In total, 55 of the largest 100 U.S. metros saw new-home sizes shrink year over year, and in 26 of those markets, median prices fell as well. Even in six areas — like Akron, OH; Baltimore; Dallas; Greenville, SC; Madison, WI; and Orlando, FL—prices declined despite homes getting larger.
The most dramatic price drop was in Little Rock, AR, where the median new-home list price fell 13% compared to the first quarter of 2024.
A National Trend Toward Lower Asking Prices
The decline isn’t limited to regional markets. Nationally, the median list price for a newly built home was $448,393 in Q1 2025, down 0.3% from a year earlier and 1.3% from Q1 2023. Since the peak in Q3 2023, new-home asking prices have trended steadily downward.
By contrast, prices for existing homes have continued to rise, reaching a median of $394,963 in Q1—up 1.4% from last year and 5.1% from 2023. In an interesting turn, March 2025 marked the first time the median sales price of new homes dipped below that of existing homes, as buyers leaned into the more affordable new-home inventory.
Budget-Friendly New Homes Are in Demand
In March, the median sales price for new single-family homes was $403,600, down nearly 8% from the year before. Significantly, half of all new-home sales were under $400,000, a notable increase from 43% the previous year. This shift shows that today’s buyers are actively seeking out lower-priced properties.
This buyer preference aligns with the broader effort by builders to serve price-conscious segments amid high borrowing costs and inflationary pressures.
Tariffs May Reverse Recent Progress
While the current trend offers hope, clouds may be forming on the horizon. According to Realtor.com, newly announced tariffs—including a proposed jump in Canadian lumber duties from 14% to 34% — could add nearly $11,000 to the cost of a new home.
“Builders’ costs will increase, which means that the price of homes will increase, and the affordability challenges facing prospective homebuyers will only worsen,” said Realtor.com Senior Economist Joel Berner.
Builders and buyers alike will need to monitor tariff developments closely, as they could undercut affordability gains just as the market shows signs of becoming more buyer-friendly.
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