. Prices for new homes were higher in 50 mainland China cities in May compared with the prior month, versus 56 cities where prices rose in April, according to a gauge of price movements in 70 major cities published by the National Bureau of Statistics on its website. Of the cities where new-home prices rose, 27 showed a softening in the pace of gains compared to April, the bureau said. The May data also showed home prices fell in nine cities and were where unchanged in 11to buyers such as a finished basement and an upgraded kitchen. Builders are tailoring their incentives to specific buyers, so some will throw in things like initiation fees for a country club membership." New Homes Disadvantages In spite of the added builder incentives, real estate experts say new homes are typically more expensive than existing homes. "Traditionally, new homes are more expensive because they are being built from the ground up," Kruse says. "In recent years, some new homes have come down somewhat in cost because the builders have been hurt so badly by the downturn in the housing market. For the most part, though, builders try to keep price integrity and will offer closing cost assistance or upgrades rather than lower the base price." Upgrades and closing cost funds are typically tied to the buyer using a builder-designated lender and title company. "I would caution buyers, at least in our market in the Chicago area, to be careful buying a new home because builders are competing against foreclosures and it could be long time before a new home will increase in value," Ristine says. "Even with builder incentives, you are usually paying a premium for buying a new home, so you need to hold onto it for five years or more to build any equity." Fitzgerald says buyers of new homes should expect to own longer than buyers of existing homes because of differences in the rate of price appreciation. "In a new home community, if you need to sell within a year or two, you are competing against the other homes that are still being built and can be customized," Fitzgerald says. "Buyers will choose a brand-new home rather than a 1-year-old home, especially if the builder can offer incentives that a regular seller cannot." One other downside is the potential for living in the midst of a construction site for several years, particularly if the builder has slowed development due to the recession. When to Buy a New Home Realtors agree that the best values for a new home are available when the development is nearly complete. "In years past, buyers wanted to get in early to take advantage of preconstruction pricing and a better location within the community, but now buyers want to get in late, so if you have to sell you won't be competing with newer homes in the development," says Kruse. Ristine says buyers should be cautious about buying before a community is near completion, because some builders are so financially strapped that they cannot complete their developments. Existing-Home Advantages "The biggest advantage of existing homes is the maturity of the community," Kruse says. Buyers can take a historical perspective and look at how well the homes have held their value. Plus, buyers willing to purchase a fixer-upper can more easily increase the value of their property than someone with a new home. Fitzgerald says that buying in an established community allows h