Incentives and price reductions are salvaging new U.S. home sales at a time when buyers are beset with affordability challenges and economic concerns.
July sales of new single-family homes totaled a seasonally adjusted annual rate of 652,000, according to a report Monday from the U.S. Census Bureau and the Department of Housing and Urban Development. The rate was less than a 1% drop from the revised June figure and 8.2% below July 2024, but it still easily beat analysts' predictions of 635,000.
The latest figures are more evidence that, while modest, new home sales have been relatively stable in recent months, according to Odeta Kushi, deputy chief economist at financial services firm First American.
"They’re still outperforming prepandemic levels, which suggests incentives are helping to support activity, though their impact is clearly limited in an affordability-constrained environment, especially with rising resale inventory and broader macroeconomic uncertainty," Kushi said in an email to Homes.com.
On a year-to-date basis, new home sales are down in all four U.S. regions, dropping 23.1% in the Northeast, 6.2% in the West, 4.2% in the Midwest and 1.4% in the South, the National Association of Home Builders noted in an analysis of the government data.
The trade group defines a new home sale as when a buyer signs a contract or a builder accepts a deposit. The home can be in any stage of construction, from not started to complete.
Listings dip but remain elevated
Meanwhile, the seasonally adjusted total of new houses for sale at the end of July was 499,000, down from June's 511,000 reading, which was the highest since October 2007, the report found. Still, the July total was 7.3% above July 2024's count.
There was a 9.2 months' supply of new homes for sale last month, well above the four- to six-month range typical of a market balanced equally between buyers and sellers.
Builder price cuts have helped to lower home prices. The median price of new houses sold in July was $403,800, down 0.8% from June and 5.9% from July 2024 — the biggest annual price decline since November, noted Lisa Sturtevant, chief economist for Bright MLS.
"Historically, new homes sell for more than existing homes, but that pattern has been upended in recent months as new home inventory has surged," Sturtevant said in a statement.
Last week, the National Association of Realtors reported the median sales price for existing homes was $422,400, up 0.2% from one year earlier. Sales of existing homes and condos rose 2% to a seasonally adjusted 4.01 million, while the number of existing properties on the market, 1.55 million, is the highest in five years.
Jing Fu, the NAHB senior director of forecasting and analysis, pointed out that 17% of new homes in July were priced below $300,000, while 31% were priced above $500,000.
“Affordability challenges continue to sideline many prospective home buyers,” Fu said in a statement. “The majority of new homes are now concentrated in the $300,000 to $500,000 price range, reflecting ongoing pressures from elevated interest rates, labor shortages, rising construction costs and inefficient regulatory costs.”
