New-home sales in the U.S. dropped in July as homebuilders increasingly struggle to lure cash-strapped buyers. According to data from the U.S. Census Bureau and the Department of Housing and Urban Development, sales of new single-family homes were down 0.6% in July compared to June and dropped 8.2% from a year earlier.
The seasonally adjusted annual sales rate for new homes was 652,000 in July. New home prices were also down last month, slumping 5.9% year-over-year to a median price of $403,800 – the lowest since November 2024. In a reversal of historical trends, new homes are actually cheaper than existing (resale) homes, with existing homes priced at about $20,000 less than newly built homes.
It seems that builders are willing to cut prices to lure homebuyers, but attractive pricing and other sales incentives have failed to combat a flaccid market. “The median sales price of existing homes and new homes are moving in opposite directions,” noted Realtor.com Senior Economist Joel Berner in a statement.
“Builders are offering more incentives to entice home shoppers, but because the inventory of existing homes has grown and would-be buyers have more options and more negotiating power with sellers, they are less likely to be looking for new construction,” said BrightMLS Chief Economist Lisa Sturtevant in a statement.
Meanwhile, sales of existing homes ticked up 2% in July from the seasonally adjusted June rate of 4.01 million, the National Association of Realtors reported. Existing home sales represent the vast majority of the U.S. residential market.
Corresponding to sluggish demand for new homes, builder sentiment remains weak in August, with 66% of homebuilders reporting using incentives including discounts and mortgage rate buydowns – the highest rate in at least five years, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI).
Overall, more homebuilders rate the market for new single-family homes as “poor” rather than “good,” with builder confidence at 32 in August (anything below 50 signals negative sentiment). Affordability is the main challenge, with elevated mortgage rates and lofty home prices deterring buyers.
The median sale price for existing homes was just 0.2% higher in July from a year earlier, indicating that price growth has flatlined – which suggests that prices are falling in nearly half of the country. National inventory grew 15% from a year ago, approaching a nine-year high.
Federal Reserve Chair Jerome Powell suggested last Friday that the Fed’s policy stance may need to change, signaling a possible rate cut at the U.S. central bank’s meeting in mid-September. The Freddie Mac 30-year fixed mortgage rate was unchanged last week at 6.58%.