“The current housing market is rooted in an affordability crisis, leaving many average American families feeling excluded from the traditional promise of upward mobility and home ownership,” SAYS Stuart Miller, CEO of a Fortune 500 homebuilder Lennarduring a December earnings call. Lennar’s average selling price declined 10% year over year to $386,000 in Q4 2025, according to its earnings. report.

During the fourth quarter of 2025, nearly 20% of new homes will face price reductions, Realtor.com report shows, and the current decline in house prices is tracking around 18%. This shift suggests we are entering a buyer’s market, Realtor.com says, as home prices fall.

“New construction has been one of the strongest segments of the housing market over the past few years, but builders are clearly responding to today’s affordability pressures and higher levels of existing home inventory,” Realtor.com chief economist Danielle Hale said in a statement.

Affordability remains tight despite this activity. Mortgage rates are still hovering around 6%, much higher than the sub-3% homebuyer rates during the pandemic. In consideration of median house price in the US of about $400,000, prospective home buyers need to spend $80,000 for a down payment. and most Americans do not have an emergency account even with $1,000 saved up, that means a down payment is out of the question.

But for those financially ready to buy a home, new construction discounts can be good news.

“What we’re seeing is a market where single-family new construction is filling an affordability gap that resale homes can’t,” Realtor.com senior economist Joel Berner said in a statement.

Past incentives at current discounts

The fall of 2023 marks the start of a housing market deep freeze, with home sales at Great Depression lows amid mortgage rates topping 8%. At that time, Homebuilders rely on incentives such as rate buydowns, closing-cost credits, and free upgrades.

At the time, Devyn Bachman, senior vice president of research with John Burns Research and Consulting, said these incentives were the “number one” driver for the increase in new home sales numbers.

“‘Incentive’ is just a big word for discount, and what we’re seeing on that front is that it’s creating a competitive advantage for the new home market,” he said. luck in 2023. The mortgage rate buydown, the industry term for discounted mortgage rates, is the most “desired and most effective” incentive offered in the new-home market today, he added.

Additionally, independent sellers of existing homes can’t match the kinds of incentives that big builders like Lennar and Tol BrothersErin Sykes, chief economist at residential real estate brokerage firm Nest Seekers International, said luck at that time.

But now, new home builders are forced to offer straight discounts to stay competitive and attract home buyers.

“Builders are aware of the affordability issues facing people across the country, and they’re responding,” Berner wrote in August’s National Association of Realtors. report.

Where the cuts appear

While discounts are becoming more common (one in five new homes were discounted in Q4 2025), they are not spread evenly across the country.

Price reductions are generally concentrated in the South and West, according to Realtor.com, where most of the country’s new construction has occurred in recent years. The states with the overall share of price reductions, listings of new homes above the national average are relatively nationwide, however: They are Nevada (nearly 25%), Indiana (23.3%), South Carolina (21.6%), Minnesota (21.6%), North Carolina (21.3%), New Jersey (nearly 20%), and Texas (19%).

Meanwhile, “new constructions in the Northeast and Midwest are more of a luxury product and harder to come by,” so they are not discounted at the same level of frequency, according to Realtor.com.

An upside-down condo market

An exception to the trend of new construction homes facing price declines are condos and townhomes. During Q4 2025, the median list price for newly constructed condos and townhomes was higher than for newly constructed single-family homes.

Almost 10% of all new condos sold in the US are in New York City or Miami, where median listing prices top $1 million. Meanwhile, new single-family construction is concentrated in more affordable markets such as Houston, Dallas, San Antonio, Atlanta, and Phoenix, where prices are closer to the national median.

“Many new condos will be targeted at luxury buyers, while many new single-family homes are designed for the entry-level buyer,” the Realtor.com report explained. “It may also be the case that existing single-family homes hold their value better than attached homes.”