CHM Blog

Builders blinked first

In real estate, new usually costs more. Newer appliances, fresher finishes, no one else's renovation decisions baked into the walls. So it's worth pausing on a genuinely odd data point: right now, buying someone else's house costs more than buying a brand new one.

According to the National Association of Home Builders, drawing in the U.S. Census Bureau and NAR data, the median price for a new home in Q1 2026 was $403,200. That’s $1,400 less than the median price of an existing home. It's a small gap, but the direction is what's surprising.

NAHB Manager of Economic Services Onnah Dereski explained the dynamic in a recent post. New home prices have dropped 4.7% over the past year, she noted, the result of deliberate builder decisions such as smaller lots, smaller footprints, and buyer incentives to stay competitive despite rising material costs driven by energy price spikes and tariffs. Existing home prices, meanwhile, keep creeping up because inventory remains thin and, in many markets, sellers simply haven't adjusted their expectations to match reality. "A lack of price discovery for existing homeowners," as Dereski puts it.

This flip has been building for a while. From 2010 to 2020, new homes were consistently pricier than existing ones. The gap narrowed briefly, then widened again — and for the past four quarters, existing homes have held the more expensive spot. Builders, facing headwinds on every front, have been undercutting the resale market just to move product.

Geography complicates the picture. New homes tend to be most expensive in the West and Northeast, so regional sales swings can move the national median in ways that don't reflect broader trends. That may help explain why new home prices jumped 8% between March and April even as overall new home sales fell 6.2% compared to March — the West posted an 18.7% sales increase during that stretch, according to Realtor.com Senior Economist Joel Berner, likely pulling the median upward.

The broader takeaway, per Dave Gallagher at Real Estate News, is that the usual rules of the housing market are still somewhat scrambled. Builders are doing what they can to stay affordable. Existing homeowners are holding firm. And buyers are caught in the middle — sometimes finding that the better deal comes with a warranty and fresh paint.

RealEstateNews, TBWS

How Rates Move:

Conventional and Government (FHA and VA) lenders set their rates based on the pricing of Mortgage-Backed Securities (MBS) which are traded in real time, all day in the bond market. This means rates or loan fees (mortgage pricing) moves throughout the day, being affected by a variety of economic or political events. When MBS pricing goes up, mortgage rates or pricing generally goes down. When they fall, mortgage pricing goes up. Tracking these securities real-time is critical. For more information about the rate market, contact me directly. I'm among few mortgage professionals who have access to live trading screens during market hours.

Rates Currently Trending: Higher

Mortgage rates are moving higher today. The MBS market improved by +87 bps last week. This was enough to decrease mortgage rates or fees. The market experienced high volatility last week.

This Week's Rate Forecast: Neutral

These are the three areas that have the greatest ability to impact rates this week. 1) Jobs, 2) Geopolitical, and 3) ISMs

1) Jobs: We have a lot of job and wage related data all week long which culminates with Big Jobs Friday where we will get NFP, Unemployment and Average Hourly Earnings.

2) Geopolitical: A lot of movement over the weekend with Geopolitical events, how those unfold for the rest of the week can have a big impact on long bonds.

3) ISMs: The PMIs and Employment Components of the Manufacturing and Services ISM releases are the most important data points of the week outside the Payroll data.

This Week's Potential Volatility: High

This morning markets are under heavy pressure due to geopolitical worries. Volatility has started high and could stay that way all week.

Bottom Line:

If you are looking for the risks and benefits of locking your interest rate in today or floating your loan rate, contact your mortgage professional to discuss it with them.

Richard Sardella has been actively managing and providing services in the mortgage industry for over 30 years. Richard serves on the board of directors as President of Colorado Home Mortgages Inc.

All information furnished has been forwarded to you and is provided by thetbwsgroup only for informational purposes. Forecasting shall be considered as events which may be expected but not guaranteed. Neither the forwarding party and/or company nor thetbwsgroup assume any responsibility to any person who relies on information or forecasting contained in this report and disclaims all liability in respect to decisions or actions, or lack thereof based on any or all of the contents of this report.

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