Are New Homes Becoming Less Affordable Than Existing Ones in 2025?

The affordability gap between new construction and existing homes has widened in 2025, though seasonal buying trends may be partially responsible. In the second quarter, the mortgage on a median-priced new home required about 36 percent of a median-income earner’s pay, while an existing home required 37 percent. Both options remain above the federal benchmark of 30 percent of income for housing costs, with many households spending even more.

For lower-income buyers, the challenge is greater. Households earning 50 percent or less of the median income would need to devote 71 percent of their income to a new-home mortgage and 74 percent to an existing-home mortgage. This unusual scenario, where existing homes appear less affordable than new ones, may be a temporary distortion influenced by the time of year. Larger existing homes often sell disproportionately in late spring and summer as families move before the school year begins, while new-home sales do not follow the same seasonal pattern.

Despite these seasonal shifts, analysts note that over time the price gap between new and existing homes is narrowing. Builders are taking steps to improve affordability by constructing smaller homes, lowering prices, and offering incentives such as mortgage rate buydowns. These strategies are helping more buyers enter the market, though experts stress that broader policy changes are needed to address housing shortages and long-term affordability. Measures such as reducing regulatory barriers, addressing labor shortages, and improving material supply chains could further expand housing options and relieve affordability pressures.

Source: Homes.com, “Affordability gap between new and existing homes widens, but seasonal buying trends may be at play,” by Madeleine D’Angelo, August 28, 2025