What happened: New home sales were relatively unchanged in July, down just 0.6% from the previous month and still running behind the volume of sales last year. The number of new homes available for sale continued to sit above year-ago levels in all regions, as sales have not kept up with the flow of new homes coming to market. The Midwest remains an exception, with more sales completed than a year prior, even while inventory has built up, highlighting recent momentum in building in the region. At the same time, the national median sale price for new homes has continued to fall.
Why it matters: Demand is still trailing supply, adding to inventory and prompting builders to cut prices, much as sellers are in the market for existing homes. Competitive pricing and other incentives have not been sufficient to offload new homes at the previous pace. Buyers also seem less willing to purchase a home not yet built, dragging down expectations for future construction. Sales of homes not started dropped to 12% of new home sales in July, down from 15% a year prior.
More builders cut their prices in July — 38% of builders — compared to 31% this time last year. However, the average price reduction in July remained at just 5%, lower than the 6% seen in July 2024. The share of builders offering sales incentives has also remained steady. Nearly 62% of builders provided sales incentives of all forms in July, compared to 61% a year ago.
For potential buyers, price declines will help to improve housing affordability. Without further downward price adjustments, surpassing last year’s sales level could prove challenging.