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The cost of buying a new home now almost equals that of a pre-existing home, a frustrating reality in today's housing market.

The median sale price for new homes in August was $420,600, a mere 1% higher than pre-existing homes at $416,700, during the same period. Measured by a rolling average of 12 months, the premium for buying a new home is at its lowest level since the 1980s.

"Instinctively, the price of a typical newly-built single-family residence should be higher than that of a typical resale home," says Dietz, Chief Economist of the National Association of Home Builders (NAHB).

"But when the resale housing stock is extremely tight, the sales prices of the two often converge."

An effect called "rate lock," caused by rising interest rates makes lower rate or mortgage-free home owners reluctant to list their homes for sale. Even though the number of homes available for sale now has increased since last year when interest rates were above 7%, there are still about 1.35 million units available as of August, nearly 1 million less than a decade ago.

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