Sales of newly built homes dropped sharply in July as elevated borrowing costs continued to weigh on buyers and the supply of homes on the market increased, according to data released Tuesday by the U.S. Census Bureau and Department of Housing and Urban Development.
New single-family home sales came in at a seasonally adjusted annual rate of 607,000, down 10.5 percent from a revised 678,000 in June and 6.3 percent from the July 2025 rate of 648,000. Neither decline was statistically significant, the Census Bureau indicated.
Inventory, meanwhile, rose to a seasonally adjusted 488,000 homes at the end of July, up 1.9 percent from June. That represented 9.6 months of supply at the current sales pace, up from 8.5 months a month earlier and 9.2 months in July 2025.
The median price of a newly built home fell to $393,800, down 2.3 percent from June and 0.9 percent from a year earlier.
Through the first seven months of the year, an estimated 390,000 new homes were sold on a non-seasonally adjusted basis, down 4.1 percent from 407,000 during the same period in 2025.
Builders work to overcome buyer caution
Economists said affordability pressures and hesitant buyers continue to shape the new home market, forcing builders to lean heavily on incentives, price cuts and less expensive homes to keep sales moving.
“Those sluggish sales are creating opportunities for buyers, as motivated builders offer more choice, more negotiating room and more ways to get a deal done,” Sam Williamson, senior economist at First American, said in a statement.
Sam Williamson
Williamson pointed to builder incentives and a shift toward less expensive homes as evidence of that effort. Census data show 53 percent of new homes sold in July were priced below $400,000, compared with 50 percent in July 2025.
That shift has also made newly built homes unusually competitive with the resale market. According to Williamson, new homes were cheaper than existing homes for a fifth consecutive month, with the gap reaching $40,300 — the widest in data going back to 1999.
Ali Wolf, chief economist at NewHomeSource and Zonda, similarly described July as a challenging market for builders, with mortgage rates keeping payment-sensitive consumers on the sidelines.
Ali Wolf
“Consumers still want to buy homes, but uncertainty is making them more cautious,” Wolf said in her commentary. “Builders are leveraging financing tools, right-sizing floor plans, and offering homes with lower spec levels to keep costs and monthly payments more manageable.”
Zonda found 25 percent of builders lowered prices from June to July, compared with 12 percent that raised them, while 63 percent held prices steady. Wolf said the market is likely to continue “treading water” until affordability improves.
Midwest posts steepest new home sales decline
But the national decline doesn’t tell the whole story, with sales varying widely across the country’s different regions.
The Midwest saw the sharpest decline, with new home sales plunging 42.7 percent from June to a seasonally adjusted annual rate of 43,000. Sales were down 50.6 percent from July 2025, the only regional year-over-year change Census identified as statistically significant.
Sales in the South — by far the nation’s largest new-home market — declined 13 percent from June to an annual rate of 383,000 and were down 5.2 percent annually.
The Northeast moved in the opposite direction, with sales rising 30.3 percent from June and 95.5 percent from a year earlier, although Census’ large margins of error mean those increases were not statistically significant.
Sales in the West increased 6.2 percent from June to an annual rate of 138,000 and were 2.2 percent higher than in July 2025.
