It does apply to new houses, but you can't consider the sales tax in isolation. It's offset by the fact that you get to keep your entire income. Not just the portion on the pay stub, either; your employer would no longer owe payroll taxes. In general, you would get some or all of those, too.
Financing a 30% more expensive house and paying for it out of a 30% bigger paycheck would be somewhere between neutral and a win for most people.
It makes a silly imbalance between new and old properties. The immediate second you buy that new house, it's price drops in value 30%. So you have little incentive to buy new as you can get 30% more house for buying slightly used.
Doesn't seem to stop people from buying new cars. ;)
Nah, the sale of a used house is a totally private transaction. It's not as though there's a magical base price for a house of that size, and then a tax. It'll be sold for whatever the seller can get for it. If it's practically new, it might be the original price including the tax. Heck, it might be higher.
The original builder doesn't get to keep as much of the retail price as a subsequent private owner would. That's the distinction between new and used.
Nor is it as though buying a fixer-upper avoids the tax entirely. Materials and labor for renovations are taxed. That can be a significant portion of what's put into a home.
Financing a 30% more expensive house and paying for it out of a 30% bigger paycheck would be somewhere between neutral and a win for most people.