Conventional wisdom has long held that buying an existing, lived-in home costs less than buying a newly built one. And that can be true. But the reverse can also be the case. Let’s look at how a newly constructed home could be more affordable than an older one.

Compare the Median Home Prices

The numbers don’t lie. According to recent data from the U.S. Census and the National Association of Realtors (NAR), the median sales price for a newly built home in the U.S. has fallen below the median price for an existing home.

It sounds odd. And it’s a historical anomaly. But this past May, we saw an atypical flip: median single-family existing houses sold for $424,500; median newly built single-family homes sold for $417,400. According to Zillow, this is the largest discount on newly built homes in six years.

The trend isn’t true everywhere. In cities including San Jose, San Francisco, and Milwaukee, it’s more expensive to buy a new home compared to an existing one. But there are lots of cities, including Dallas, in which you’re likely to find a newly built home that is more affordable than a comparable existing one. A recent Zillow study found that in Dallas, the discount for new homes compared to existing ones is $9.90 per square foot. As homes in the Dallas-Fort Worth area have a median of 2,246 square feet, you can see how that discount adds up.

So what’s changed?

Builders. They are increasingly building smaller, lower-cost houses that entice buyers to choose newly built homes. It’s part of a townhouse boom. Last year, new townhome construction hit its highest national level since 2006. And builders are lowering prices to sell these newly built homes. A National Association of Home Builders survey found that around 30% of home builders report cutting prices to boost sales.

What about building a home yourself?

Constructing a home could also cost less than buying an existing one. With help from the affordable, hassle-free financing of a One Time Close Construction loan. This unique mortgage product allows you to lock in an interest rate before construction starts and avoid a second set of closing costs that are common with traditional construction loans.

Whether you build a home, buy a newly built one, or purchase an existing one, the loan experts at the Decker Group are ready with the right financing. Call us today at (972) 591-3097 or connect with us online.