New houses now cost less per square foot than old houses
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New U.S. homes are selling for $3.50 less per square foot than old ones, the widest gap in at least six years, according to a recent Zillow report.
Why it matters: People typically pay a premium for brand-new houses, but in this brutal home market, some are finding deals among new construction.
State of play: Home shoppers are seeing such discounts in 21 major U.S. metros, led by San Diego, Salt Lake City and Los Angeles, per Zillow.
The big picture: With elevated interest rates hammering housing affordability, many builders are shrinking homes to cut costs or offering incentives, including lower rates on mortgages.
- The average 30-year fixed mortgage rate has fallen lately, reaching 6.47% last week, according to Freddie Mac.
By the numbers: The national median new home price inched down 0.1% to $417,300 in June from a year earlier, census data shows.
- Compare that with existing home prices, which recently hit a new high of $426,900, per the National Association of Realtors.
- Low inventory of existing houses for sale is helping keep those prices elevated.
The bottom line: "Not only are cash-strapped buyers continually seeking out lower-cost options, but developers are changing what type and size of home they're producing to try and meet that need," Zillow senior economist Orphe Divounguy tells Axios.
