Sales of newly built homes remained slow in June, sending inventory higher and relieving pressure on prices.
Signed contracts for new single-family homes were at a seasonally adjusted annual rate of 627,000 last month, up 0.6% from May but down 6.6% from a year earlier, the U.S. Census Bureau reported Thursday.
The median sales price of new houses sold in June was $401,800, down 4.9% from May and 2.9% lower that one year ago.
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“These falling prices reflect the recent trends of builders delivering smaller and more affordable homes to the market, but also the harsh reality that demand for homes is waning as more buyers simply decide that they cannot afford a new home purchase under current market conditions,” says Realtor.com® Senior Economist Joel Berner.
Compared with the prior month, new-home sales dropped in the Northeast and West but rose in the Midwest and South. Sales were down annually in every region aside from the Midwest.
Inventory continued to rise, with the supply of new homes for sale hitting a seasonally adjusted 511,000, up 8.5% from a year earlier. It represented a supply of 9.8 months at the current sales rate, up from 8.4 months one year ago.
“The number of homes for sale is at its highest level in the past year at the same time that the number of sales is at its lowest with the exception of last month,” says Berner. “New-home buyers have ample opportunity to find a home and little competition to deal with, but they remain reluctant to make a purchase.”
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Affordability challenges, including from elevated mortgage rates, continue to sideline many homebuyers, and the new report was another sign that a weak spring housing season shows no signs of picking up in the summer months.
“Though the number of options for buyers is up and prices are down, buyers and builders are still struggling to make a deal,” says Berner.
The report follows data this week showing that sales of previously owned homes, which account for the vast majority of all home sales, also struggled in June, dropping to their lowest level in nine months.
The U.S. is now on pace for the third consecutive year of historically weak home sales, according to the Realtor.com Housing Forecast Midyear Update released Wednesday.
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The forecast projected that that sales volume for existing homes will fall 1.5% annually in 2025 to just 4 million transactions.
That would mark the slowest year for existing-home sales since 1995, when they registered 3.8 million. Home sales were also at their lowest since 1995 in both 2023 and 2024, according to the NAR.
In many markets where home prices have surged beyond what local wages can afford, many prospective homebuyers appear to be on strike, opting to continue renting rather than make a purchase.
Home sellers also seem disinclined to negotiate by dropping prices. A recent Realtor.com analysis found that delistings surged 47% in May from a year ago, as sellers who couldn’t find their asking price removed their homes from the market.
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Both sides may be waiting for mortgage rates to improve, after rates remained stuck in a fairly narrow range above 6.6% since the beginning of the year.
Newly built homes on average come with lower rates, due to builder incentives such as rate buy-downs. But the sluggish sales figures for new construction suggest that those incentives haven’t been enough to overcome tepid demand.
On a regional, year-to-date basis, new-home sales are down 25.6% in the Northeast, 8.5% lower in the Midwest, 1.6% less in the South, and down 4% in the West.
“Unless there is a material improvement in financing conditions or household income growth, a near-term acceleration in new home sales appears unlikely,” says Danushka Nanayakkara-Skillington, the National Association of Home Builders’ assistant vice president for forecasting and analysis