New homes sell $35,400 under resales. Builders stopped replacing them.

The median new home sold $35,400 below the median resale in August as 43% of builders cut prices. September permits fell to their lowest since 2023.

The Editors · Markets · 7 min read · Oct 20, 2026

A two-storey wood-framed house under construction on a bare lot in a Michigan subdivision, with workers on the upper floor and trees behind — Photo: Dwight Burdette(opens in a new tab), CC BY 3.0(opens in a new tab), via Wikimedia Commons

By the numbers

$35,400how far the median new home sold below the median resale in August 2026

43%of homebuilders cut prices in October, the highest share since at least 2020

845,000single-family permits in September at an annual rate, the fewest since March 2023

7.40%the average 30-year mortgage rate in mid-October, a near three-year high

A new house now costs less than a used one. In August 2026 the median new home sold for $393,700, according to the Census Bureau, while the median existing home sold for $429,100, according to the National Association of Realtors. That's a gap of $35,400, about 8% of the resale price.

The gap opened because builders cut and owners didn't. In October, 43% of builders reduced prices, the highest share the National Association of Home Builders has recorded in the 2020 to 2026 period, and the average cut was 6%. Resale prices were still up 1.6% on the year, their 38th straight annual gain.

The September construction data, released October 20, shows the other half of the story. Builders are selling down the houses they finished and starting fewer to replace them. Single-family permits fell to 845,000 at an annual rate, the lowest since March 2023. Our read: the discount on new homes is a clearance sale, and a clearance sale ends when the stock runs out.

Why new homes went on sale first

Builders and owners face the same 7.40% mortgage rate. They react to it in opposite ways.

An owner who doesn't sell pays nothing extra. Many hold a mortgage written at a lower rate and can wait. NAR's own chief economist, Lawrence Yun, said on October 20 that the limited number of distressed properties is keeping prices steady.

A builder can't wait. A finished house that doesn't sell carries the loan that paid for the land and the lumber, plus taxes and upkeep. So builders pay to move it: a lower price, or an incentive such as a mortgage rate buydown. In October 65% of builders offered incentives, the 19th month in a row above 60%.

The demand they're competing for is thin. The 30-year fixed rate averaged 7.40% in the week of October 15, unchanged on the week and up from 6.27% a year earlier, per Freddie Mac. NAR's pending home sales index, which counts signed contracts, fell 7.3% in September to 66.0, the lowest reading since the series began in 2001. Builder confidence fell to 29, its lowest since June 2012, and the gauge of buyer traffic fell to 18.

How far the price gap can be trusted

The two medians don't describe the same houses. New homes skew toward the South and toward the edges of metro areas, where land is cheaper. A median can also fall because builders sold more small houses, without any house getting cheaper.

The Census figure is also noisy. Its 5.8% annual drop in the new-home median comes with a confidence interval of plus or minus 8.2 points, so by the Bureau's own test that fall isn't statistically significant. The average price tells the same story with more certainty: it fell 8.8% on the year to $478,700, and that drop does clear the significance bar.

Here is the comparison the data does support.

$417.9k$393.7k$429.1k

View as table

Median sale price, new vs existing homes
label	Median sale price, new vs existing homes
New home, Aug 2025	$417.9k
New home, Aug 2026	$393.7k
Existing home, Aug 2026	$429.1k

Source: Census Bureau and HUD, Sep 24 2026; NAR, Sep 10 2026

A year earlier, working back from NAR's 1.6% gain, the existing-home median was about $422,300, roughly $4,400 above the new-home median. That's our calculation from the two published figures. The gap grew eightfold in twelve months because one side cut and the other held.

What it means in a payment: at 7.40% with 10% down, a 30-year loan on the median new home costs about $2,453 a month in principal and interest. The same loan on the median resale costs about $2,674. That's $221 a month, our arithmetic on Freddie Mac's average rate, before taxes and insurance.

The stock being cleared is shrinking

The discount sits mostly on houses already built or underway, and builders have been working that stock down all year.

Census counted 113,000 completed new homes for sale at the end of August, seasonally adjusted. In January there were 128,000. That's a 12% drop in eight months. The median finished house had been on the market 3.2 months, down from 3.5 in the spring.

Total new homes for sale, counting those not started and under construction, held at 483,000, or 8.5 months of supply at August's sales pace. Existing homes sat at 4.9 months. Builders have more to sell, which is why they're the ones cutting.

What they aren't doing is replacing it. September's construction report shows:

Single-family starts: 859,000 at an annual rate, down 4.6% from August.
Single-family permits: 845,000, down 4.0% and the lowest since March 2023.
Single-family completions: 840,000, down 2.4%.

Permits lead starts, and starts lead completions by months. Our read: fewer permits in September means fewer finished homes to discount in 2027.

What would change the read

Two things could keep the discount going longer than the permit data suggests.

The first is rates. If mortgage rates keep climbing, demand falls faster than builders cut supply, and the finished stock clears more slowly. Freddie Mac's rate tracks the bond market, which we cover in our guide to what mortgage-backed securities yield in 2026. Yun said on October 20 that rates "could be topping out". That's a forecast, and the weekly rate data hasn't shown it yet.

The second is resale supply. Existing-home inventory reached 1.62 million in August, the most since November 2019. If owners start cutting too, the new-home gap narrows from the other side. So far the resale median is still rising on the year.

And the gap can close the other way. A rate drop would bring buyers back to a market with fewer new houses in the pipeline. How much a policy move can shift mortgage rates is the subject of our piece on the MBS buyback and the 6.76% rate.

Who this matters to

A buyer shopping in late 2026 holds the strongest hand with a builder sitting on a finished house. That's where the price cuts and the incentives are, and where the seller pays for every month the house sits. An owner selling a resale is competing with a builder who is cutting 6% and often paying down the buyer's rate.

The dates to watch: Census publishes September new-home sales on October 27, the Fed meets October 27 and 28, and October's construction report comes on November 18. If completed inventory keeps falling while permits stay near 845,000, the discount on new homes is closing.