The affordability crisis is spurring unprecedented price cuts in the housing market, Realtor.com reports
The is pushing homebuilders to take an almost unprecedented step: cut prices on new homes more sharply than existing homeowners are reducing their listing prices. This marks a historic first for the housing market in recent times, per a report issued on Thursday.
“Today’s housing market is deeply stuck in an affordability crisis, which is shutting out many ordinary American families from the classic promise of upward mobility and owning a home,” Stuart Miller, CEO of 500 homebuilder , stated during a December earnings call. Lennar’s average selling price fell by 10% year-over-year to $386,000 in Q4 2025, according to its earnings report.
In the fourth quarter of 2025, nearly 20% of new homes saw price reductions, as shown by Realtor.com’s , while existing-home price cuts trail at around 18%. This shift indicates we’re entering a buyer’s market as home prices decline, Realtor.com notes.
“New home construction has been one of the most stable segments of the housing market over the past few years, but builders are clearly reacting to current affordability pressures and higher existing-home inventory levels,” Danielle Hale, Chief Economist at Realtor.com, said in a statement.
Affordability will remain strained despite these moves. Mortgage rates still hover around 6%, far higher than the sub-3% rates homebuyers enjoyed during the pandemic. Given the of about $400,000, prospective buyers would need to put down $80,000 for a down payment. And of even $1,000 in savings means a down payment is completely out of reach for many.
But for those financially prepared to buy, discounts on new construction are welcome news.
“We’re seeing a market where new single-family homes are filling an affordability gap that resale homes increasingly can’t,” Joel Berner, senior economist at Realtor.com, stated in a release.
From past incentives to today’s direct discounts
Fall 2023 marked the start of a severe housing market slowdown, with existing-home sales at Great Depression lows amid mortgage rates peaking at 8%. At that time, like rate buydowns, closing-cost credits, and free upgrades were offered.
Devyn Bachman, senior vice president of research at John Burns Research and Consulting, noted then that these incentives were the top driver of rising new home sales figures.
“‘Incentive’ is just a fancy term for discount, and this is what’s giving the new-home market a competitive edge,” she told in 2023. She added that mortgage rate buydowns—industry jargon for discounted rates—are the most desired and effective incentive in the new-home market today.
Plus, independent sellers of existing homes couldn’t match such incentives typically offered by large builders like Lennar and , Erin Sykes, chief economist at residential brokerage Nest Seekers International, told at the time.
Now, new-home builders are forced to offer straight-up discounts to stay competitive and attract buyers.
“Builders are aware of the affordability issues facing people nationwide and are responding,” Berner wrote in an August National Association of Realtors .
Where price cuts are occurring
While discounts are becoming relatively common (one in five new homes were discounted in Q4 2025), they aren’t evenly spread across the country.
Price reductions are mostly concentrated in the South and West—regions where most new construction has clustered in recent years, per Realtor.com. States with price-reduced new-home listings exceeding the national average are spread across the country: Nevada (nearly 25%), Indiana (23.3%), South Carolina (21.6%), Minnesota (21.6%), North Carolina (21.3%), New Jersey (nearly 20%), and Texas (19%).
Meanwhile, “new builds in the Northeast and Midwest are more luxury-focused and harder to find, so they aren’t discounted as frequently,” according to Realtor.com.
A reversed condo market trend
Condos and townhomes are an exception to the new-construction price drop trend. In Q4 2025, the median listing price for newly built condos and townhomes was actually higher than for new single-family homes.
Nearly 10% of all new condos for sale in the U.S. are in New York City or Miami, where median listings top $1 million. New single-family homes, however, are concentrated in more affordable markets like Houston, Dallas, San Antonio, Atlanta, and Phoenix—areas close to the national median price.
“Many new condos may target luxury buyers while most new single-family homes are designed for entry-level buyers,” the Realtor.com report explained. “It could also be that existing single-family homes hold value better than attached homes.”