New-Home Prices Plunge to 5-Year Low as Sales Falter

Prices for newly built homes have hit their lowest level in five years, as homebuilders continue to grapple with weak buyer demand, newly released data shows.

In July, the median sales price of new homes fell to $393,800, down 2.3% from the prior month and the lowest since July 2021, the U.S. Census Bureau and the Department of Housing and Urban Development reported on Tuesday.

That price is also far below the median existing home price of $434,100, meaning prices for new homes remain lower than for previously owned homes, an inversion of historical norms.

Meanwhile, contract signings for newly built homes plunged 10.5% in July from the prior month, falling to a seasonally adjusted annual rate of 607,000. That's also down 6.3% from a year ago, a sign that even seller flexibility on price isn't boosting sales.

That's having a knock-on effect on the number of new builds. The Census Bureau's latest new residential construction report found that single-family housing starts in July were down 9.9% from June and 15.7% lower than a year earlier.

A regional look at new home sales

"The bright spot is the Northeast," says Realtor.com® senior economist Joel Berner. The seasonally adjusted annual rate of new homes sold was at its highest level of 2026, up 30.3% month over month and up 95.5% year over year.

The South, on the other hand, saw sales fall 13% month over month and 5.2% year over year, while the Midwest was down 42.7% month over month and 50.6% year over year.

It's not all bad news, though, says Berner.

"The number of new homes for sale rose to its highest level since October 2025 as the pace of sales slowed, though most of the growth came from homes for sale that have not yet been started. The number of completed homes rose slightly from June’s levels but remains below last July. The softening of new home sales activity is dissuading builders from completing as many homes that do not have buyers lined up, and they prefer instead to sell more homes in the planning stage."

The seasonally adjusted estimate of new houses for sale at the end of July 2026 was 488,000, which is 1.9% above the June 2026 estimate of 479,000, but 1.6% below the July 2025 estimate of 496,000. This represents 9.6 months of housing supply at the current sales rate, which is 12.9% above the June 2026 estimate of 8.5 months, and 4.3% above the July 2025 estimate of 9.2 months.

Builders are facing compounding challenges

This latest Census data on new homes comes as the National Association of Realtors reported a 1.7% decline in existing home sales in July. NAR Chief Economist Lawrence Yun said the strain on the market is due largely to interest rates that have remained above 6.6% for much of the year.

“Home sales have been remarkably stable, even amid the rising mortgage rate environment of the past few months. Year-to-date sales are up 2.4%, and there’s no doubt that the housing market would be thriving if average mortgage rates were to return near 6%."

Bill Owens, chairman of the National Association of Home Builders (NAHB) and a home builder and remodeler from Worthington, OH, also cited rising inflation and overall economic uncertainty as contributing to a weakening market.

“New-home sales fell in July to their slowest pace since the start of the year as affordability challenges limited home buyer traffic," he said. "NAHB surveys show that a majority of builders continue to offer sales incentives, including mortgage rate buydowns, to support new home sales.”

For buyers willing to enter the market, despite uncertain times, "the new home market is firmly in buyers’ territory," says Berner. "New-home shoppers are likely to find low prices and incentives if they decide to buy new, and can take advantage of a lower total cost of ownership over time.

"It’s a great time to be buying a newly built home; it’s a tougher time to be building and selling them," he continues. "Builders are facing increased costs from tariffs, labor shortages, and overall price increases at the same time that buyers are proving to be quite wary and quite demanding of concessions. This is why we see new home starts falling, as builder margins are being compressed from both sides."