New home sales post unexpected

Sales of newly built single-family homes rose 20.5% in August to a seasonally adjusted annual rate of 800,000. That’s up from an upwardly revised July reading, according to data from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. The pace of new home sales is 15.4% higher than a year ago. The three-month moving average was 713,000, compared with 656,000 in July.

On a year-to-date basis, sales remain down 1.4%.

“New home sales experienced a significant surge in August, while builder confidence held steady at a low reading in September,” said Buddy Hughes, chairman of the NAHBand a home builder and developer from Lexington, N.C. “While this month’s figure may be subject to downward revision, we do expect a general improvement in sales over the coming months, supported by the recent decline in mortgage rates.”

Jing Fu, NAHB senior director of forecasting and analysis, pointed to interest rate relief as a key driver. “According to Freddie Mac, the average 30-year fixed mortgage rate has declined by 32 basis points over the past four weeks and now sits at 6.26%—its lowest level since early October 2024,” Fu said. “This downward trend in rates, combined with the recent Fed interest rate cut, signals a positive outlook for future housing demand.

If this momentum continues, we expect new home sales to gain traction as more buyers reenter the market in the final quarter of 2025.”

A new home sale is counted when a sales contract is signed or a deposit is accepted. Homes may be at any stage of construction. The August rate was 800,000 units. That figure reflects the number of homes that would sell if the pace continued for 12 months.

New single-family home inventory declined for the third straight month. In August, 490,000 residences were on the market across all stages of construction. That figure is 1.4% lower than July and 4% higher than a year ago. At the current sales pace, the supply of new homes was 7.4 months, down from 8.2 a year earlier.

The median sales price was $413,500, up 1.9% from August 2024.

Builders continue to lean on incentives to drive sales. An NAHB survey showed 37% of builders cut prices in August, while 66% used sales incentives.

Regionally, year-to-date sales are down 22% in the Northeast, 3.9% in the Midwest and 7.3% in the West. Sales in the South are up 3.3%.