Something bizarre is happening in the U.S. housing market. At the national level, new homes are selling for less than existing ones.

In June, the median existing home sold for $441,500, while the median new home went for $401,800. Since 1968, 690 months in total, new homes have only undercut existing ones 22 times. From June 1982 to May 2024, it happened just twice, and the 1990s never saw the inversion happen at all. Yet, since May 2024, this flipped market has popped up seven times, happening every month from April through June of this year, the latest data we’ve got. June’s gap was a record-breaker: new homes sold for 9% less than existing ones, smashing the previous record 3% discount.

When an economist sees numbers that look backward, the instinct is to look for what’s missing. Eric Fox, chief economist at Veros Real Estate Solutions, a firm that provides housing market analytics and forecasting, puts it this way: if a chart doesn’t make sense, there’s usually a hidden variable that explains it. That’s to say, the numbers aren’t as odd as they look once you find what’s going on under the surface.

A good place to start is to look at the particulars, if only to understand what isn’t happening.

Kevin Weingarten has a buyer under contract for a three-bedroom, two-and-a-half-bath townhome in Chalfont, Pennsylvania. It’s 30 miles from Center City Philadelphia; take Route 611 and you’re there in about 45 minutes, a manageable but not always pleasant commute. Far enough from Trenton, the closest New Jersey Transit station to New York City, it avoids the long-distance commuter crowd, keeping the price down.

Built by Foxlane Homes, the 2,000-square-foot unit has the open kitchen-and-living setup buyers want. Use the builder’s mortgage and title company, and they’ll toss in a deck and a finished basement. No luxury here—basic cabinetry and flooring, everything upgradable—but it’s new, clean, and in the Central Bucks School District, a big draw for families. Sales price: $620,000.

Weingarten, 52, has been selling homes in the Philadelphia suburbs for 13 years, after spending years as a project manager for a builder, giving him a clear-eyed view of both sides of the housing market. He says good luck finding a comparable resale closer to Chalfont. Existing townhomes, when they pop up, sell 10% to 15% cheaper than new construction. But they’re rare, and inventory stays tight.

That’s what you’d expect. All else being equal, a new home next to an existing one will almost certainly cost more. New homes command........

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