Sales of newly built single-family homes beat consensus estimates by a mile in August, increasing 20.5% from a month prior and 15.4% from a year ago, according to new U.S. Census Bureau figures.
New single-family home sales climbed to a seasonally adjusted annual rate of 800,000 units compared to economists’ projections of 650,000. The Census Bureau revised the new-home sales pace for July higher to a rate of 664,000 units from the previous estimate of 652,000 units.
Aggressive use of sales incentives like mortgage rate buydowns and home price reductions may have helped seal more deals, as the advance in new home sales occurred prior to recent weeks of declining mortgage rates. Thirty-year fixed mortgage rates averaged 6.56% for the weekly period ending Aug. 28, according to Freddie Mac.
Rising existing-home inventory has slowed the pace of new-home sales over the course of 2025. New-home sales have tracked to their lowest sales level in more than five years, according to Lisa Sturtevant, chief economist at Bright MLS, a large multiple-listing service.
“With the inventory of existing homes on the rise, the new home market will likely remain sluggish through the end of the year,” she predicts. “Home builders may have to wait until next spring until they see more buyer interest.”
New homes comprise a much bigger share of available inventory in the West and South regions, where mortgage demand has plummeted, than in the Midwest and Northeast, Sturtevant notes. New-home sales were 40.9% higher year over year in the Northeast in August, but down 5.7% in the West.
Builders reported optimistic future sales outlooks, however, in a mid-September update to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index, as well as anticipated increase in the use of sales incentives.
Prospects of continued interest-rate easing pushed the future-sales sentiment index to its highest level since March. At the same time, 39% of builders reported cutting prices in September — the highest share of the post-pandemic period.
“Still, signs of a soft market remain,” commented Odeta Kushi, deputy chief economist at First American Financial Corp. “Demand is there, but it’s taking incentives to coax hesitant buyers off the sidelines.”
Rising household expenses in August and deteriorating labor conditions that prompted the Federal Reserve to trim its benchmark borrowing rate by 25 basis points at its September policy meeting have weighed on consumers who might otherwise purchase.
Roughly one-third of all for-sale inventory nationwide is new construction, much higher than the historical norm of 10% to 12% of total inventory. That rising share represents more competition between builders and a loss of pricing power, particularly as borrowers find room to negotiate lower prices in the existing-home market.
Nevertheless, the median sales price for new houses sold in August was $413,500, according to Census Bureau data. That is a 4.7% increase from $395,100 in July and is nearly 2% above the $405,800 median new-home sales price a year ago.
The Census Bureau’s seasonally adjusted estimate of new houses for sale at the end of August was 490,000 units, 1.4% below July’s estimate of 497,000 but 4% above last August’s estimate of 471,000. At the current sales pace, new homes for sale at the end of August represented 7.4 months of supply.
