PHILADELPHIA, PA — Philadelphia-area buyers paid about 15% more per square foot for newly built homes than existing properties in July, bucking a national shift that has made new construction cheaper on that measure as builders in higher-supply markets cut prices and compete for buyers.
New construction in the Philadelphia metro sold for a median of $270 per square foot in July, compared with $235 for existing homes, according to a Zillow analysis. New homes accounted for just 4.2% of Philadelphia-area sales during the 12 months through July, down from 7.3% in 2019.
Nationally, the relationship has reversed. Newly built homes sold for a median of $205 per square foot, below the $212 median for existing homes.
New construction had historically commanded a premium, selling for more per square foot in 77 of 84 months from 2018 through 2024. New homes have instead sold at a discount to existing properties in 17 of the past 19 months.
The gap reached $12 per square foot in June as builders became more willing to cut prices and use incentives to move inventory.
The divergence between Philadelphia and the national market underscores the role of housing supply. Markets with heavy construction generally have stronger competition among builders, while areas with more limited development tend to retain premiums on newly built homes.
“Where the most new homes have been built, buyers are in the best position to negotiate as sellers have a lot of other homes on the market to compete with,” Zillow senior economist Kara Ng said.
The supply of new U.S. homes reached 9.6 months in July, up from 7.6 months two years earlier and roughly six months in July 2018 and 2019. Existing-home inventory, meanwhile, remained 17.1% below its pre-pandemic level.
That imbalance gives builders more incentive to compete on price while many existing homeowners face less pressure to sell. Zillow noted that homeowners who bought or refinanced when mortgage rates were near 3% often have relatively low monthly payments and have accumulated substantial equity during the pandemic-era housing surge.
The largest new-construction discounts were concentrated in markets that built aggressively. New homes in Austin sold for 19.3% less per square foot than existing properties, while the discounts reached 14.4% in Raleigh and 12.4% in Tampa.
The pattern reversed in supply-constrained markets. New construction carried a 64.9% premium per square foot in the New York metro, 50.7% in Cleveland, 46% in Milwaukee and 44.5% in Detroit.
New homes represented 12.6% of U.S. sales during the 12 months through July, returning to the same share recorded in 2019 after reaching 16.7% in 2023. The proportion varied sharply by market, reaching 37.1% in San Antonio and 33.6% in Raleigh.
Philadelphia moved in the opposite direction. Its 4.2% new-construction share was 3.1 percentage points below 2019, leaving new homes a relatively small part of the region’s sales market even as expanded supply has given builders greater pricing pressure elsewhere.
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