New-Home Sales Rise as Builders Offer Deals on Mortgage Rates

Sales of newly built homes surged in August as climbing mortgage rates drove budget-conscious buyers toward homebuilders' rate buydowns.  

Contract signings for new-construction properties reached a seasonally adjusted annual rate of 684,000 last month, up 6.4% compared to July, the U.S. Census Bureau and Department of Housing and Urban Development reported Thursday. However, the August sales figure was down 2% from a year ago,

At the same time, the prices of new builds ticked up, with August's median sales price registering at $393,700, up 0.4% from July's $392,200.

Annually, however, the median new-home price shed 5.8% from August 2025's $417,900, the result of builders having to offer incentives to attract buyers.

A recent Realtor.com® analysis shows that nearly 1 in 7 new-construction listings advertised reduced interest in August with an average rate below 4% compared to the 6.67% average for standard 30-year fixed mortgages.

Meanwhile, the National Association of Realtors (NAR)® reported earlier this month that existing home sales retreated in August, down 2% month over month and 1.2% year over year to an seasonally adjusted annual rate of 3.98 million.

However, pending home sales rose slightly in August on a monthly basis but fell compared to year-ago levels, reported NAR.

Regionally, the Midwest had the strongest performance in August, with the number of new homes sold growing 84.9% month over month and 22.5% year over year.

The South saw its highest level of new-home sales since November, though the growth figures were more modest, rising 6.9% month over month and 3.4% year over year.

The Northeast and West struggled, with new-home sales plunging 20.7% and 26.8% year over year, respectively.

"The growing sales figures in the less-expensive Midwest and South are part of what is pulling the median sale price down, as fewer homes are selling in the more expensive Northeast and West," notes Realtor.com senior economist Joel Berner.

Builders pull back

The number of newly built homes for sale at the end of August was 483,000, 2% lower than last year, reflecting a pullback in new-construction activity as builder confidence slumped to a one-year low.

With fewer new homes coming onto the market, the months of supply in the new-home market decreased to 8.5 from 9 last month.

"Despite the contraction, the new-home market is still firmly in buyers’ territory, offering home shoppers a wealth of options to choose from and a leisurely pace of sales," says Berner.

The number of for-sale homes that have not yet been started reached its highest level in the past 12 months, while the number of completed homes for sale fell to its lowest level in a year.

According to Berner, this is happening because builders are reluctant to deliver as many completed homes in the current sluggish market, preferring to find buyers before starting on the home instead.

The good news for buyers is that they still hold the power in the new-home market, and they have the opportunity to find savings on their purchase in the form of builder incentives, including reduced mortgage rates, cash at closing, and free upgrades to the new home.

Builders are also cutting prices at a higher rate than existing home sellers, so competitive prices can be found on new builds as well.