New single-family home sales declined slightly in July, but still exceeded economist forecasts thanks to aggressive builder incentives and price reductions. The Commerce Department reported a seasonally adjusted annual rate of 652,000 units sold, down 0.6% from June and 8.2% year-over-year. Economists surveyed by Bloomberg had anticipated a slower pace of 630,000.
Despite the monthly slip, sales held steady relative to recent months. June’s sales pace was revised slightly to 656,000. Inventories remained elevated, with 499,000 new homes available at July’s end—equivalent to 9.2 months’ supply at the current sales pace. A balanced market is typically considered to be 4 to 6 months of supply.
The median price for a new home fell to $403,800, a 6% drop from July 2024. The average price stood at $487,300, underscoring a continued push toward affordability. Builders have increasingly offered financial incentives and price cuts to maintain demand in the face of high borrowing costs.
According to the National Association of Home Builders (NAHB), 66% of builders reported offering sales incentives in August—the highest level since the pandemic began. About one-third also reported reducing prices.
Affordability remains a serious hurdle. NAHB’s Cost of Housing Index shows that a typical family needs 36% of their income to afford a new median-priced home, and 37% for an existing home. For low-income households, the burden rises sharply to 71% and 74%, respectively.
NAHB Chairman Buddy Hughes noted that builders are cutting home sizes, lowering prices, and offering financing deals to help buyers. He called on policymakers to reduce regulatory burdens and address labor shortages to allow for expanded housing supply.
Mortgage rates in mid-August hovered in the mid-6% range, offering slight relief but still well above pre-2022 levels.
