Why new homes are now $40k cheaper than existing homes

Build relationships that compound

Early in our careers, James and I found a young developer named Zach Vela and refused to let go. We didn't wait for him to come to us — we kept bringing him deals, one after another, until he started listing with us on the back end.

The first was a $6.5 million teardown. He built on it, and we sold it for him for $37 million. That's $44 million from a single relationship — and it didn't stop there. Over the next eight years, we did roughly $200 million in transactions with Zach alone, because we stayed close, stayed useful, and never stopped showing up.

That lesson matters more now than ever. With mortgage rates expected to stay elevated through the rest of this year and into 2027, homebuilders and developers — many of whom can offer rate buydowns and incentives buyers can't get elsewhere — are becoming the best source of deals in the market.

For agents, that's an opening. The agents who build relationships with builders now won't just close one deal — they'll build a pipeline that pays off for years.

In today's Foundation Plans, I break down exactly how to start.

- David

New homes are now $40k cheaper than existing homes

New-home prices just dropped $40,300 below the median existing-home price, giving buyers a rare price edge on new construction. Builders are leaning on price cuts and hefty incentives to move rising inventory, even as new-home sales cooled in July.

That’s according to the latest update from the Census Bureau. Here are the key takeaways:

• New-home sales slowed while supply grew. Sales fell 10.5% month over month to a seasonally adjusted annual rate of 607,000, down 6.3% year over year. Months' supply climbed to 9.6, up from 8.5 in June — well above the 6-month threshold that signals a buyer's market.

• New construction now undercuts resale pricing. The median new-home price fell to $393,800, down 2.3% from June and the lowest since March 2026, compared to a $434,100 median for existing homes — a $40,300 gap in favor of new builds.

• Builder incentives are running roughly double the norm. Builders typically offer 5-6% incentives, but current rates are closer to 10-13%. For example, K. Hovnanian is offering a 10.8% incentive ($58,000 off a $539,000 home) and Lennar a 12.9% incentive ($51,600 off a $400,000 home).

• Entry-level pricing dominates new-home sales. More than half (53%) of new homes sold in July were priced under $400,000, with 19% under $300,000 — putting new construction in direct competition with resale listings at the same price points.

• Resale demand remains resilient despite the shift. NAR chief economist Lawrence Yun notes that home sales have stayed stable even as mortgage rates have risen in recent months, suggesting many buyers still see value in existing homes despite builder incentives.

My take

Rates aren't coming down the way anyone hoped. Zillow now expects 30-year rates to only fall to 6.5% by year-end, while Fannie Mae just revised its forecast up to 6.8% for Q4, with both firms pointing to a tougher affordability picture through the second half of the year. That's exactly why this report matters right now. Builders aren't waiting around for rate relief; they're cutting prices and stacking incentives worth 10-13% to move inventory today, which means buyers can lock in a genuinely better deal on new construction than they could a year ago. Agents who sit on this information do their buyers a disservice — the smart move is surfacing these numbers now, before rates climb further and before builders scale back the incentives once supply tightens back up.

Nationally, home prices are up by little more than 1%

U.S. home prices rose 1.1% year-over-year between July 2025 and July 2026, according to ResiClub's analysis of Zillow's Home Value Index. That's a modest acceleration from a year earlier, when annual price growth stood at just +0.2%.

Here’s what else ResiClub reports:

• Monthly price growth is running below the seasonal norm. Home prices rose just +0.4% month-over-month from June to July 2026, compared to the historical average of +0.8% for that same period since 2000.

• 42% of major metros are seeing outright price declines. 21 of the nation's 50 largest metro markets (42%) posted falling year-over-year home prices in July 2026 — a sharp contrast to 2018, 2020, 2021, and 2022, when 0% of those metros saw declines.

• High-inventory Sunbelt markets are correcting. States like Texas, Florida, and Colorado — where inventory has climbed above pre-pandemic 2019 levels — are seeing mild price corrections, while tighter-inventory markets in parts of the Northeast and Midwest are holding up better.

• Florida's correction is losing steam. Tampa's year-over-year price decline shrank dramatically, from -6.2% (July 2024–2025) to just -1.2% (July 2025–2026), and parts of Southwest Florida — long a weak spot — are now seeing inventory declines that suggest the downturn is stabilizing.

My take

The 1.1% national gain makes the housing market look more unified than it really is. More than 4 in 10 of the country's largest metros are still seeing prices fall, while tighter markets in the Northeast and Midwest are holding up better. What's changing isn't that housing is suddenly getting stronger: it's that some of the weakest markets are getting less weak. Tampa going from a 6.2% annual decline to 1.2% is the clearest example. That's stabilization, not recovery, and for now, that's probably the best way to describe the national market too.

The top metros buyers can score late-summer home deals

Late August and early September mark the sweet spot for scoring a deal in several major U.S. metros, according to a new Redfin analysis. 

Sellers who listed back in spring or early summer and still haven't found a buyer are growing more willing to cut prices or sweeten the deal to finally close. 

Many of these markets currently favor buyers, with sellers outnumbering house hunters by as much as two to one in some areas.

Here are the top metros where buyers can score late-summer home deals:

My take

Late summer might be one of the smartest times for sidelined buyers to jump back in. Inventory hasn't dried up yet, fewer people are competing for the same homes, and sellers who've been stuck on the market for months are more open to making a deal. That doesn't guarantee a steep discount — but it does mean more room to negotiate on price, repairs, closing costs, or other concessions. In places like Austin, Sacramento, and Atlanta, buyers are finally getting something that's been rare lately: real choices and real leverage.

Schematics

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• Use these reactivation texts for leads you haven’t called since spring 

• What the government can – and can’t – do to lower mortgage rates

Foundation Plans

Advice from David to win the day

Mortgage rates are expected to remain above 6.5% for the rest of the year. So, it’s going to be even more important for agents to build relationships with homebuilders and developers. They’ll be offering the best deals for most buyers. Today, I'll share some of our best tips on how to cultivate relationships with builders and how to develop a network of developers who will feed your business for years to come.

Start with the deals – The best way to get noticed by a developer is to bring them an amazing deal. Instead of approaching local developers asking for opportunities, bring them a deal they can’t pass up! This means building a strong client list using the marketing strategies we always talk about: door-knocking, open houses, mailers, email blasts, social media, etc. 

Take buyers to the site – Developers want to work with agents who are constantly making connections and finding new buyers. This proves you’re the kind of agent who will do everything you can to find the perfect buyer when the property is ready.  

Practice your pitch – Know what you’re going to say before you set foot on the jobsite. Developers want to work with confident, knowledgeable agents, and a bold pitch is your one shot to prove that’s you!

This is just the tip of the iceberg. To learn more, I encourage you to watch and review this early episode of “Rise Above the Ranks,” in which James and I talk about our success with developers and reverse-engineer the process for new agents.

Just in Case

Keep the latest industry data in your back pocket with today’s mortgage rates:

“You’ve gotta keep control of your time, and you can’t unless you say no. You can’t let people set your agenda in life.” — Warren Buffett

Don’t let events or other people set your agenda. Stay ruthlessly focused on your goals — your time is limited, and you only get one life. Make the most of it. Have a wonderful week.

We’ll see you back here on Friday!

- David