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Aside from homebuilders cutting down on lot sizes and building on smaller foundations, new homes are being designed with open floor plans that eliminate obsolete space, such as hallways.

And as the average prices of new and existing homes narrow, more homebuyers are turning to new construction.

Since the beginning of the year, when the average new home price was $503,375, prices have fallen more than $60,000 to an average of $443,328 this summer.

In that same period, the average existing home price rose from $412,118 to $431,510 — an increase of more than $19,000.

With a difference of less than $12,000 for the average price, some buyers are finding new homes that are less expensive than an existing home.

even says it’s cheaper to buy a new house than an existing house in the current market.

“New homes being less expensive than resale homes is an odd situation to be in,” said Joel Berner, senior economist with . “The affordability difference goes beyond sticker price, too, as many builders are offering incentives like cash at closing or reduced mortgage rates that make a major difference in upfront costs and monthly payments.”

In other words, new homes are likely even cheaper than they appear relative to existing homes, since homebuilders are offering sweeteners that don’t show up in the median sales price, the economist says.

Those “sweeteners” include mortgage buydowns where the interest rate is reduced for up to three years when a new home is purchased, something that is rare, if not unheard of, in a resale transaction.

Gone, too, are extensive amenities in new housing communities and smaller lots with homes designed with bedrooms and bathrooms that open directly off main living areas.

“There’s more value in a resale home, in my opinion,” said Bill Arnold, board president. “But, ultimately it is the buyer’s decision.”

He pointed out that the difference in lot sizes also changes the value.

A typical 5,500-square-foot lot of a generation ago is now 3,500 to 4,500 square feet to keep costs of new homes down, along with more two-story home models that reduce the cost of the foundation as concrete prices continue to climb.

The average cost per square foot on a resale home is about $221 versus $300 for a new home.

But, the final sticker price is what makes the difference for many homebuyers, and new homes are selling well.

Arnold noted that many buyers in the Tucson market, more than 40%, are looking for homes in the $300,000 to $400,00 price range.

That “sweet spot” is what homebuilders are targeting with their modifications.

“One way to keep prices under control is you’re getting what used to be a ‘starter home’,” said local housing analyst Jim Daniel, with .

So far this year, each month has seen more homes sold than there have been new permits for future builds, due to concerns about the economy and the possible impact of tariffs.

“It’s not an inventory issue,” Daniel said of the homebuilder hesitance. “Closings are looking really good and consistent.”

Still, his forecast for the year is that new home permits will close out the year at about 3,900 — a decrease of nearly 7% from 2024.

“Everyone is a little uncertain,” Daniel said. “Both builders and homebuyers.”