New home sales moved sideways in June

July 24, 2025

New home sales moved up just 0.6% in June from a drop in May. Sales totaled 627,000, 6.6% lower than a year ago. The Northeast region, the smallest market for newly built homes, registered a 28% drop, while sales in the West fell 8.4%. Those losses were offset by gains in the Midwest and South, up 6.3% and 5.1%, respectively.

Newly built homes available for sale added up to a 9.8 months' supply at the current sales pace. The market needs about a six-month supply to be considered balanced. It is running well above the 8.4 months' supply recorded a year ago.

Existing home sales, which are recorded at the contract closing and reflect activity from a few months prior, fell 2.7% in June. The average 30-year fixed mortgage rate has been stuck between 6.8% and 6.9% for four months in a row, while consumer attitudes remain suppressed. Cancellations have increased along with rising insurance and real estate taxes, which have raised the threshold on affordability.

The Northeast recorded the largest hit, with existing home sales down 8%, the largest one-month decline since February 2022. The West was the only region to see modest gains in June, up 1.4%, after three months in a row of losses. Supply is beginning to pick up, with former rental properties coming back on line due to the high carry costs.

Inventory of resale homes decreased 0.6% to 1.53 million units; however, the supply of unsold inventory is up to 4.7 months, reflecting the current sales pace. Many buyers are locked into sub-5% mortgages or own their homes outright, which has depressed listings overall.

The median sales price for new builds fell 4.9% to $401,800; it's also down slightly year-over-year. Builders have gone to great lengths to move downscale and offer discounts to keep first-time buyers in the market. Those shifts are wearing thin and are not enough to keep housing affordable for most first-time buyers. About half of homes sold were priced over $400,000; the share of single-family homes sold in the $300,000 to $400,000 range reached an all-time high of 35%. The price for existing homes rose 2.7% in June and 2% year-over-year.

Some local housing markets are seeing price declines due to lower demand, but the trend does not suggest a larger, national home price correction. Stronger demand from millennials aging into their prime home-buying years while construction has been weaker will keep a floor under home prices. Markets that experienced extreme price increases during the pandemic are most likely to see prices cool in the near term. Affordability challenges remain extremely elevated; the rising costs of insurance, taxes and borrowing costs are sidelining buyers.