U.S. New Home Sales Slip in July as Buyers Confront High Rates and Rising Supply

25 August 2025

A drone view shows new single family home construction in San Diego, California, U.S., March 25, 2025. REUTERS/Mike Blake/File Photo

July’s new-home sales dipped modestly to a seasonally adjusted annual rate of 652,000 units, a 0.6 percent fall from the previous month's upwardly revised total, yet still echoing a housing market under strain from elevated mortgage rates and economic caution. The Commerce Department’s latest figures revealed that June’s sales were far stronger than first reported adjusted from 627,000 to 656,000 units nudging the previous month well into positive territory.

Analysts surveyed by Reuters had anticipated a July recovery, projecting sales to climb to about 630,000 units. That July sales failed to meet expectations underscores how sensitive new-home demand remains to rising borrowing costs. Compared with last year, July’s sales were down 8.2 percent, signaling deeper headwinds despite minor rallies.

Digging into the data provides context for July’s softer numbers. Inventory stood at 499,000 new homes for sale slightly below June’s 502,000 but 7.3 percent above July 2024 figures—translating to a daunting 9.2-month supply at current sales levels. While inventory is only marginally lower than the previous month, it represents a significant increase from year-earlier levels, affording buyers a wider range of options or giving them space to wait.

Price trends add another layer to the story. The median price for new homes in July slipped to $403,800, down its prior-month level of $407,200, and down 5.9 percent from July 2024’s $429,000. Meanwhile, the average price fell to $487,300 from $505,300 in June, signaling that builders are responding to cooling demand with more aggressive pricing or product mix shifts.

New-home sales account for just over 10 percent of overall U.S. home transactions, yet their volatility and sensitivity to economic factors make them a leading indicator for the broader housing sector. These figures picked at the point of contract signing can fluctuate sharply, especially amid rising borrowing costs. Slowdowns in this segment can foreshadow broader dips in consumer spending, as home purchases ripple through demand for furniture, appliances, and services.

July’s data shows a market recalibrating itself. With mortgage rates still hovering near multiyear highs and the cost of living tight, buyers appear to be choosing wait-and-see over immediate commitment. Builders, once rallying to meet demand, are increasingly offering incentives and adjusting prices to attract wary customers.

Taken together, the lens of new-home sales in mid-2025 reflects a housing market at a crossroads firmly tethered by cost, supply, and sentiment, and poised on the slide between cyclical slowdown and recovery.