Think New Homes Cost More? Not Right Now.

Buyers and sellers in Rochester MN continue adjusting to changing inventory levels and mortgage rates across Southeast Minnesota.

Below is the latest real estate market insight relevant to buyers and sellers throughout Rochester MN and Southeast Minnesota.

Most people think a newly built home costs more than an existing one. But right now, that’s actually backwards. Newly built homes are more affordable than existing ones in a lot of markets. And that’s because builders are cutting prices and stacking on incentives to try to keep their inventory moving.

Here’s why that’s really important for any would-be homebuyer to know.

Newly Built Homes Are the Better Deal Right Now

According to the latest data from the Census and the National Association of Realtors (NAR), a newly built home now typically costs about $40,000 less than an existing one (see graph below):

Builders aren’t like homeowners who can wait for the right offer. Unsold homes cost them money as long as they sit empty. So, builders cut prices and add incentives to keep them moving. That trend has carried into August. NAHB’s latest numbers:

• 35% of builders cut prices, with an average reduction of 6%. 

• 63% offered incentives like covering closing costs or buying down your mortgage rate. 

And those incentives can make a real dent in what you pay upfront and every month after. Plus, since everything is new and many builders offer warranties, you could save on home maintenance costs too. And with affordability where it is, every dollar counts.

So, don’t cross new builds off your list just yet. Yes, you may think they cost more, but that’s not always the case. 

If you can get brand-new everything for less than buying an existing home, isn’t that at least worth looking into? 

Don’t Let the Builder Pick Your Teammate

But before you tour a single model home, there's one thing worth figuring out first – who's actually working for you once you walk through that door.

That friendly rep in the builder's sales office works for the builder, not you. Their job is to protect the builder's bottom line, not yours. Your own agent flips that. 

They know the local market, so they can tell you if the builder's price and upgrades stack up against other options nearby. They'll negotiate on your behalf, whether that's a lower price, free upgrades, or a rate buydown. 

A good agent will also push for a home inspection. Builders won’t always bring it up, but it’s a step you shouldn’t skip, even on a new build. And your agent will be in your corner, so you know what you’re buying and get the best deal possible. 

Bottom Line

New homes may actually cost less than an existing home right now. And that’s opening up a window for you to get brand-new for less.

If you want a list of new home communities near you that are currently offering incentives or doing price cuts, reach out to a local agent. When you have your own agent, you’ll have someone in your corner helping you get the best deal possible.  

Thinking About Buying or Selling in Rochester MN?

The Gwaltney Group helps buyers and sellers throughout Rochester MN and Southeast Minnesota navigate the market with confidence.

Explore more Rochester MN real estate resources:

• Rochester MN Homes for Sale
• Mayo Clinic Relocation Guide
• First Time Home Buyers
• Best Neighborhoods in Rochester MN

Rochester MN Housing Market Questions

Is now a good time to buy a home in Rochester MN?

Market conditions continue changing throughout Rochester MN, making local expertise more important than ever for buyers and sellers.

Are home prices dropping in Rochester MN?

Housing prices vary depending on neighborhood, inventory levels, condition, and overall buyer demand throughout Southeast Minnesota.

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