New home sales rebounded in August

September 24, 2026

New home sales rose 6.4% in August to a seasonally adjusted annual rate of 684,000. July was revised up sharply to 643,000 from 607,000. Sales are 2.0% below year-ago levels and are running 2.9% behind 2025 year-to-date. New home sales are captured at the contract signing and reflect recent housing market activity.

The South, the largest region, rose 6.9% to 451,000, the strongest pace since November. The Midwest nearly doubled to 98,000, recovering from a weak July. The West fell 15.2% to 112,000 and is down 26.8% from a year ago, the weakest region by a wide margin. The Northeast fell to 23,000, a base too small to read much into.

Builders moved further down the price ladder. Homes under $300,000 made up 22% of sales, the highest share in nearly a year and up from 19% in July. Just over half sold for under $400,000, compared with 46% a year ago. Homes priced at $500,000 and above made up 26% of sales, down from 35% a year ago. Homes over $1 million dropped to 4%, the smallest share this year. The median price of a newly sold home edged up 0.4% to $393,700, 5.8% below a year ago. The average price fell 9.1% to $478,700, 8.8% below year-ago levels. 

Discounting is spreading. The share of builders cutting prices rose to 38% in September from 35% in August, with the average cut holding at 6%. Two-thirds of builders offered incentives, the most since December. Builder sentiment fell to a one-year low of 32 in September, the 17th straight month below 40, according to the National Association of Home Builders. This is the price effect that happens in interest rate sensitive sectors and underscores how blunt a tool rate hikes are in restoring price stability. 

Buyers are signing contracts for homes before they are completed. Sales of homes under construction jumped to 248,000, the highest in 19 months. Sales of completed homes slid to 353,000, the lowest since January.

The supply of finished homes is thinning. Completed homes for sale fell to 113,000, the lowest in 18 months. Homes for sale, where ground has not been broken, rose to 114,000, up 19% from a year ago. Builders are holding onto lots and permits rather than breaking ground. That is consistent with the growing backlog of permitted but not started homes, which has climbed to 280,000 potential new units.

The months' supply of new homes on the market fell to 8.5 from a revised 9.0 in July, matching a year ago; about a six-month supply is considered balanced between buyers and sellers. Total homes for sale were flat at 483,000. Finished homes took a median 3.2 months to sell, unchanged from July but down from 3.5 months in the spring and still above 2.4 months a year ago.

Existing home sales lost ground

Separately, existing home sales make up the largest market. Sales fell 2.0% in August to a seasonally adjusted annual rate of 3.98 million, in line with expectations. That was the first reading below four million since June 2025. Sales are now 1.2% below a year ago. Sales are captured at the contract closing and reflect activity from a few months earlier.

The West was the only region to hold steady. National inventory rose 3.2% to 1.62 million units, the first time above 1.6 million since November 2019. That equals 4.9 months' supply, the highest in more than a decade. The median price rose 1.6% from a year ago to $429,100, the 38th consecutive annual increase. First-time buyers accounted for 30% of sales.

Mortgage rates have climbed for five straight weeks. The 30-year fixed averaged 6.95% in the week ending September 17, up from 6.76% in the prior week and well above 6.26% a year ago. Daily lender quotes have moved above 7%, while the 10-year Treasury yield sits above 5%. Rates averaged 6.67% in August when these contracts were signed, up from 6.54% in July. 

More recently, we have seen the share of buyers opting into riskier variable rate loans to stay in the market. Those loans jumped to nearly 10% of new mortgage applications in mid-September, a multi-year high. The 30-year fixed rate hit 7.12% the week of September 18, more than a full percent above the 6.1% for a 5/1 adjustable-rate mortgage.

The Federal Reserve raised rates 25 basis points on September 16 to a range of 3.75% to 4.00%, its first hike since July 2023. Policymakers penciled in one more increase this year and another next year, and do not expect inflation back at the 2% target until 2029. 

Markets are already pricing in even more rate hikes. The Fed controls overnight rates; bond investors control the rest of the yield curve, which jumped well ahead of rate hikes by the Fed. Investors are demanding compensation for inflation and the risks associated with lending long term.