New home sales rebound

May 5, 2026

Sales of newly built homes (which are recorded at the contract signing) jumped 7.4% in March after growing 8.9% in February. Data for both months were released simultaneously as the Census Bureau catches up to data release lags stemming from the late-2025 government shutdown. In March, sales were strongest in the Northeast and South.

Builders have continued to offer discounts and other sales incentives to lure buyers. The inventory available for sale ticked down slightly in March to an 8.5 months’ supply at the current sales pace. Larger builders have more ability to provide discounts than the smaller builders, but margin compression is being felt across the board.

Over half of all newly built homes sold were priced below $400,000. In 2024 and 2025, the share was lower at around 45%, suggesting builders are actively pushing product into more affordable price points to encourage demand. The average builder discount reached around 6% in March and narrowed slightly to 5% in April, though the share of builders offering sales incentives has held at or above 60% for thirteen consecutive months.

Mortgage rates have climbed to around 6.3% in early May, erasing the modest relief buyers felt earlier in the year. Rates were supposed to be the good news story of 2026. So far, they have not cooperated. Rising bond yields, driven by geopolitical uncertainty and fiscal concerns, are pushing borrowing costs back up.

Rising oil and material prices stemming from the war in Iran and supply chain snarls are pushing up builders' costs. In April, 62% of builders reported that suppliers had raised building material costs due to higher fuel prices; 70% said they were struggling to price homes with confidence given uncertainty around costs. Diesel is a particularly acute pressure point: it powers the equipment, trucks and delivery networks that move materials from suppliers to job sites, meaning fuel price spikes translate quickly and broadly into construction cost increases.

Separately, existing home sales (which are recorded at the contract closing and are a more lagged housing indicator) dropped 3.6% in March to the lowest level since June 2025. All regions posted sales declines.

Resale inventory available for sale rose to 1.36 million units, an equivalent of 4.1 months’ supply at the current sales pace. That is good news for the chronically undersupplied housing market, but not all regions are benefiting from the uptick. Median home prices continue to rise, hitting $408,000 in March.