The US housing market saw a significant shift in the first quarter of 2025, as the price difference between new and existing homes narrowed dramatically. According to a recent statement from the National Association of Home Builders (NAHB), this convergence is largely attributed to a combination of limited inventory and higher mortgage rates.

The median price for a new single-family home reached $416,900 in Q1 2025, a mere $14,600 above the median price of $402,300 for existing homes. This represents a stark contrast to recent history. Over the past five years, the average price difference between new and existing homes hovered around $26,700. The disparity was even more pronounced in the decade leading up to 2020, with an average gap of $66,000.

This narrowing gap is primarily driven by the tightening supply of existing homes. With fewer homes available on the market, competition has intensified, pushing existing home prices upward and consequently reducing the price differential with newly constructed homes. The NAHB statement highlights this dwindling inventory as a key factor in the current market dynamics.