NAHB Provides Surprising Statistic for National Homeownership Month

The National Association of Home Builders (NAHB) celebrates National Homeownership Month in June — and this year, there is something new to cheer about as home buyers are discovering a narrow price gap between new and existing homes, according to the association.

“Home builders are committed to ensuring everyone who values homeownership has the opportunity to attain a safe, affordable home,” said NAHB chairman Buddy Hughes, a home builder and developer from Lexington, N.C. “High construction costs and labor shortages continue to be challenges for the residential construction industry.”

The median price for a new single-family home sold during Q1 was $416,900, only $14,600 above the existing home sale price of $402,300, according to NAHB analysis of U.S. Census Bureau and National Association of Realtors data. The average difference over the last five years was $26,700, while the decade prior (2010-2019) saw a much wider gap of $66,000.

Why is this happening?

There are several reasons why new and existing homes are selling at similar price points. For existing homes, tight inventory continues to push up prices. Many homeowners who secured low mortgage rates during the pandemic are hesitant to sell due to elevated interest rates. In addition, both new and existing homes saw dramatic increases in prices post-pandemic due to higher construction costs and limited supply.

Overall, home prices remain elevated compared to historical norms. However, home builders are adapting to affordability challenges by building on smaller lots, constructing smaller homes, and offering incentives. According to the NAHB/Wells Fargo Housing Market Index (HMI), 34% of builders cut home prices in May, up from 29% in April and the highest level since December 2023 (36%). More than half of home builders (61%) used various sales incentives, including mortgage rate buydowns.

Discussions Next Week in DC

On June 11, builders from across the country will meet with lawmakers on Capitol Hill in Washington, D.C., to discuss solutions to boosting the housing supply and increase affordability. More than four out of five Americans (82%) agree that housing affordability is a problem in the city or county where they live, according to a recent survey conducted by the polling firm Morning Consult on behalf of NAHB.

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