Sales of new homes in the U.S. are falling below expectations, even as builders cut prices and offer perks to attract more buyers.
The number of new single-family homes trading hands in July totaled a seasonally adjusted annual rate of 607,000, down 10.5% from an upwardly revised June figure and 6.3% below a year earlier, according to a report Tuesday from the U.S. Census Bureau and the Department of Housing and Urban Development. A consensus of analysts had predicted a July new home sales total of 620,000.
The median sale price of new houses sold last month was $393,800, 2.3% below the revised June figure and the lowest level since 2021, the government data shows.
In July, 53% of new home sales were priced at below $400,000, a 50% increase from the number that sold for less than that threshold a year earlier, said Sam Williamson, senior economist at financial services firm First American.
"Some of that shift reflects builder discounts, but product mix is also playing an important role as builders construct and sell smaller, lower-priced homes that better fit today’s budgets," Williamson told Homes.com News in an email.
Meanwhile, the number of new home sales in July hit the highest level since October while the supply of new homes for sale was at 9.6 months, rising from the June estimate of 8.5 months, noted Stephen Stanley, chief U.S. economist at Santander Bank. A six-month supply generally indicates a balanced market.
"This feels like the poor 'itsy bitsy spider' of children’s song fame," Stanley said in a statement. "Builders get partially to their goal and then get swept back by demand weakness and have to start all over again. I had been thinking that residential construction activity might level off and perhaps even rebound slightly in the second half of 2026, but these data point to more weakness ahead."
Homebuilder sentiment in early August recorded its 28th consecutive negative reading as economic uncertainty weighs on the market. Aside from lower prices, builders are relying on incentives, including mortgage rate buy-downs, to generate sales.
Still, the single-family homebuilding market is on pace for a second consecutive annual decline, wrote Robert Dietz, chief economist for the National Association of Home Builders trade group, in a blog post Tuesday. He added that new home sales are down more than 4% on a year-to-date basis.
A new home sale occurs when a sales contract is signed or a deposit accepted, according to NAHB. The trade group says the home can be in any stage of construction, from not started to completed.
Paul Owers originally reported this story for Homes.com News.