Discouraged US Homebuyers Get Two Pieces of Good News
Summary
The cost of new homes in the U.S. has dropped by about 15% compared to four years ago and is now cheaper than existing homes, which is unusual. Housing inventory is improving and almost back to pre-pandemic levels, but the supply is still not enough to meet the country’s needs, especially in high-demand areas.Key Facts
- New homes cost an average of $394,000, while existing homes cost $434,000 as of July 2026.
- Normally, new homes are more expensive than existing homes, but now new homes are about 9.3% cheaper.
- Builders have lowered new home prices due to slower demand and higher borrowing costs since mid-2022.
- Existing home prices have increased by about 15% despite less market demand.
- The U.S. has a housing shortage estimated at over 1.5 million units.
- Inventory of new homes is about 488,000, equal to 9.6 months of supply, which is high compared to sales rates.
- Restrictions on land use and high costs are limiting new housing construction, especially in the Northeast, Midwest, and California.
- Housing construction is stronger in the Southern and Mountain West regions.
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