Recent data shows that new construction homes can, at times, be less expensive than existing homes, though it depends on how you measure.
In May 2024, new builds sold for $3.50 less per square foot than existing homes ($209.70 vs. $213.20), the first time in years that newly built homes undercut older ones on that metric. Even so, the average purchase price was still about $54,000 higher for new homes because they often come with smaller lots or upgraded features.
By June 2025, the trend showed up in overall sale prices too: the median price of a new home was $407,200, about $28,000 to $33,500 less than the median for existing homes.
The takeaway: sometimes new homes are cheaper in headline numbers, but it’s worth looking at both per-square-foot costs and median prices in the same market, and factoring in builder incentives, to see which option actually costs less for you.
Can New Homes Save You Money Over Time?
The price tag on a new construction house might be higher, but the real savings show up after you move in.
With a new build, you’re starting fresh with major systems that shouldn’t need replacement for years. In contrast, an older home might surprise you with a $7,000 furnace or a $12,000 roof bill within the first few years.
Warranties add more cushion. Most builders include at least a one-year warranty on workmanship, and FHA loans require a one-year HUD warranty at closing. That coverage means certain defects are fixed at no cost, reducing the risk of early repair expenses. Insurance is often cheaper, too. New houses meet the latest building codes, which insurers generally view as lower risk.
With a new construction home, those repairs are pushed years into the future, often backed by builder warranties. So even if the purchase price of a new build feels higher at first, fewer early repairs and lower insurance risk can make it more affordable in the long run—and give homeowners more peace of mind.
How Do Maintenance Costs Compare to Existing Homes?
Maintenance is where a new build often shines.
Since everything from the water heater to the shingles is brand-new, you’re less likely to face big repair bills in the first few years. That peace of mind is part of why many buyers lean toward newly built homes, even if the purchase price is a bit higher.
Nationally, repair and upkeep costs do rise over time. The Bureau of Labor Statistics reported in July 2025 that household operations costs, including furnishings and repairs, were 3.4 percent higher than the year before. That means replacing old systems in an existing home can eat into your budget faster than you expect.
A practical way to check? Pull the permit history for an existing home on the city or county’s online portal. If you see open permits for major systems like roofing or electrical, you’ll know those costs may hit sooner rather than later.
Do Energy Efficiency Savings Make a Difference?
Newly constructed homes often come with tighter insulation, efficient windows, and high-efficiency systems. The EPA reports that ENERGY STAR-certified new homes use at least 10% less energy than homes built to code and usually deliver around 20% savings on utility bills.
In 2024, the EPA launched the NextGen program, which targets 20% or better performance above standard code levels. For homeowners, that translates to lower electric bills. And with the national average residential electricity price at 17.47 cents per kilowatt-hour in June 2025, efficiency adds up quickly.
Before you close, check the HVAC and water heater labels in the mechanical closet. Type the model numbers into the ENERGY STAR Product Finder to confirm efficiency ratings. That small step can verify whether your new home’s promised energy performance lines up with reality.
Can Builder Incentives Lower the Price?
Builders often sweeten the deal with incentives.
Many offer credits toward closing costs, rate buydowns with a preferred lender, or design-center allowances for customization. These can make new homes surprisingly affordable, even when the sticker price looks higher.
Some builders also use temporary rate buydowns that reduce your mortgage rate in the first year or two. While that lowers your monthly bill early on, the payments step back up over time, so it’s important to read the Closing Disclosure carefully.
The credits and incentives should be itemized so you see exactly how they reduce your final cost.
FAQs
Are new construction homes cheaper than existing homes?
Sometimes yes, sometimes no. It depends on the market and how you measure.
In May 2024, new builds actually sold for less per square foot than existing homes, which hadn’t happened in years. By June 2025, median sale prices also showed new homes selling for $28,000–$33,500 less than existing homes, though in many markets, the opposite can still be true.
Always check both the price-per-square-foot and median price for your specific area to get a clearer picture.
Do new homes cost less per square foot?
It depends. In 2024, averages briefly showed that a new construction home could come in slightly cheaper per square foot than an existing home, but that’s not the norm. Most of the time, new builds run higher because they use updated materials and reflect current construction costs. The exception comes when builders design smaller homes with standardized floor plans in large new developments, which can pull the averages down.
By contrast, an older home is often larger or sits on a bigger lot, and that extra space pushes the per-foot calculation higher even if the overall purchase price looks comparable.
What warranties come with a new house?
When you’re buying a new home, a home builder usually provides at least a one-year warranty covering workmanship and materials. Many also extend coverage for major structural components, sometimes for as long as 10 years, giving homeowners an extra layer of peace of mind.
If you’re using an FHA mortgage, federal rules require the builder to sign a one-year HUD “Warranty of Completion of Construction,” which ensures certain defects are corrected without cost to the buyer.
Do energy-efficient features really save money?
Yes, and the impact grows with rising utility costs. ENERGY STAR homes use at least 10% less energy than code-built houses and often achieve closer to 20% savings, which can translate into hundreds of dollars a year depending on your local rates.
Over time, efficient windows, HVAC systems, and insulation not only cut bills but also improve comfort, making them a valuable part of the total cost calculation.
Where can I check repair risks on an older home?
A simple place to start is the local permit office online.
Type in the property address and you’ll usually see a history of work of things like roof replacements, plumbing fixes, or electrical upgrades. If the records show unfinished permits or no updates on major systems for many years, that’s a sign those items may come due soon.
Checking permits this way gives you a better sense of likely costs that won’t be obvious in the listing sheet.
