New Home Sales Rise 6.4% as Median Price Falls Below $400,000

New Home Sales Rise 6.4% as Median Price Falls Below $400,000

Sales of newly built single-family homes rebounded in August, while lower year-over-year prices offered a measure of relief for buyers still confronting elevated mortgage rates and affordability pressures.

New home sales ran at a seasonally adjusted annual rate of 684,000 in August, up 6.4% from July’s revised 643,000 pace, according to data released Sept. 24 by the U.S. Census Bureau and Department of Housing and Urban Development. Sales remained 2% below the August 2025 rate of 698,000.

The median price of a new home sold in August was $393,700, putting it below $400,000 and 5.8% below the $417,900 median recorded a year earlier. The median edged up 0.4% from July.

The combination of higher monthly sales and lower annual prices highlights how builders are competing for payment-sensitive buyers in a housing market where financing costs remain a significant constraint.

New home sales rebound, but the data remain volatile

August's 6.4% increase followed a sizable revision to the previous month's estimate. Census revised July's annualized sales rate to 643,000 after initially reporting 607,000.

That revision underscores an important limitation of the monthly new-home sales report. Census estimated the August monthly increase at 6.4%, but reported a margin of error of plus or minus 19.5 percentage points. The agency therefore cannot establish from the survey with statistical confidence that sales increased from July. The estimated 2% year-over-year decline likewise carried a margin of error of plus or minus 15.7 percentage points.

The broader picture is more restrained than the headline monthly gain: August sales were still below their year-earlier level.

The National Association of Home Builders said year-to-date new home sales were down 0.6% in the Midwest, 1% in the South and 10% in the West, while they were unchanged in the Northeast.

New homes are getting cheaper compared with last year

Price data may be the more consequential part of the August report for prospective buyers and mortgage lenders.

The $393,700 median new-home sales price was $24,200 lower than in August 2025, a 5.8% decline. The average sales price fell even more sharply, dropping 8.8% year over year to $478,700. Compared with July alone, the average declined 9.1%.

New construction also carried a lower median sales price than the existing-home market in August. The National Association of Realtors reported a $429,100 median price for existing homes, up 1.6% from a year earlier.

That put the reported median price for a newly sold home $35,400 below the existing-home median in August.

The figures are not an apples-to-apples measure of identical properties: the mix, size, location and characteristics of homes sold can differ substantially between the new and existing markets. Still, the reversal is notable because newly constructed homes have historically often commanded a premium.

Builders have more tools than individual homeowners to adjust the economics of a transaction. Beyond changing asking prices, builders can use mortgage-rate buydowns, closing-cost assistance and other incentives to make monthly payments more manageable.

NAHB Chairman Bill Owens said builders “continue to use incentives and pricing adjustments to support buyers” as affordability remains challenging.

Inventory remains elevated

There were an estimated 483,000 new homes for sale at the end of August, unchanged from July and 2% below the 493,000 available a year earlier.

At the August sales pace, that represented an 8.5-month supply, down from nine months in July but equal to the estimated supply one year earlier.

NAHB said 112,000 of the homes in new-home inventory were completed and ready for occupancy.

That level of supply gives builders an incentive to keep attracting buyers rather than simply waiting for market conditions to improve.

By comparison, the existing-home market had 1.62 million properties available in August, equivalent to a 4.9-month supply at the prevailing sales pace, according to NAR.

The gap helps explain one of the unusual features of today's housing market: builders can face enough inventory pressure to cut prices or offer financing incentives even while many existing homeowners remain reluctant to sell.

Midwest drives August's increase

The August rebound was far from uniform across the country.

New home sales surged an estimated 84.9% from July in the Midwest and increased 6.9% in the South. Sales fell 36.1% in the Northeast and 15.2% in the West.

Realtor.com Economic Research reported that Midwest sales were also 22.5% above their August 2025 level, while the South posted its strongest new-home sales pace since November.

As with the national figures, regional monthly estimates can be highly volatile and should be interpreted cautiously.

What the numbers mean for mortgage demand

For mortgage lenders and originators, the August report offers evidence that demand can respond when builders make the purchase equation more affordable.

Existing-home sales moved in the opposite direction during August. They fell 2% from July to an annualized 3.98 million and were 1.2% lower than a year earlier, according to NAR.

New-home sales, meanwhile, increased despite the difficult rate environment.

The difference matters for mortgage originations because builders can actively adjust prices and incentives to meet borrowers' payment constraints. A lower purchase price reduces the loan amount before any builder-funded rate buydown or closing-cost incentive is considered.

But one month does not establish a sustained recovery. New-home sales remained below their year-earlier pace, inventory stood at 8.5 months of supply, and affordability remains sensitive to mortgage rates.

Construction data also send a mixed signal about what comes next. Single-family housing starts rose 7.6% in August to a seasonally adjusted annual rate of 918,000, but single-family building permits declined 1.8% to 878,000.

The next test will be whether lower prices and builder incentives can keep buyers engaged into the fall — or whether August's sales increase proves temporary in a market still constrained by borrowing costs.

Census and HUD are scheduled to release September new-home sales data on Oct. 27.