Housing market treads water

August 25, 2026

New home sales fell 10.5% in July to a seasonally adjusted annual rate of 607,000, reversing June’s gain which was revised higher. Sales are down 6.3% from a year ago. New home sales are captured at the contract signing and reflect recent housing market activity. The South and Midwest drove the decline. 

The median price of a newly sold home fell 2.3% to $393,800. The average price rose 4.1% to $508,800. The gap reflects the discounting that builders are doing to keep first-time buyers in a more challenging market. 

The mix stayed tilted toward more affordable homes. More than half of homes sold went for under $400,000, up from 49% in June. The $300,000 to $400,000 range was the single largest band at 34% of sales, the highest share this year. The under $300,000 share eased to 19% from 21%. Builders are still reaching for entry-level demand.

The supply of new homes for sale rose to 9.6 months, up from a revised 8.5 in June and above 9.2 a year ago; about a six-month supply is considered balanced between buyers and sellers. The count of homes for sale rose 1.9% to 488,000. 

The number of homes for sale where ground has not been broken rose to 115,000, up 20% from a year ago, while those under construction fell 9% to 256,000. Builders are holding lots and slowing construction. That shows up in the weak single-family starts data, which revealed a drop to the lowest level since November 2022. 

Finished homes took a median 3.2 months to sell after completion in July, down from 3.5 in June. That is still above the 2.6 months to sell we saw a year ago. It is taking longer to move new homes.

Separately, existing home sales fell 1.7% in July to a seasonally adjusted annual rate of 4.06 million, a second straight monthly decline, though still slightly above a year ago. Existing sales are captured at the contract closing and reflect mortgage conditions and economic activity a few months prior. The Northeast was the only region to post higher sales. 

Inventory slipped 1.9% to 1.54 million units, or 4.6 months’ supply which is tight for existing inventories. The Northeast and Midwest have not seen the overbuilding that other markets have. The supply of homes for sale is still constrained. 

The median price of existing homes sold hit $434,100, up 2.0% from a year ago and the 37th consecutive monthly increase in the median price. First-time buyers fell to 29% of sales from 33% in June, a sign of the hurdles to affordability. 

Mortgage rates eased for two straight weeks in August. The 30-year fixed rate mortgage averaged 6.65% in the week ending August 20, down from 6.67% the prior week but above the year ago's 6.58% rate. Rates climbed to a one-year high in early August before receding a bit. They averaged 6.54% in July, when the new home contracts were signed, up from 6.49% in June. 

The mortgage rate relief is modest against a broader move up in long-term yields. A global bond market selloff, driven by high debt levels, inflation concerns and heavy issuance to build data centers, has pushed yields above the levels that prevailed before the Federal Reserve began cutting rates in 2024. Long-term Treasury bond yields, which determine mortgage rates, have reached multi-decade highs in recent weeks, despite efforts by Treasury to curb rate increases with buybacks at the long end of the market.