Builders are selling less pricey homes

July 24, 2026

New home sales rose 1.6% in June to a seasonally adjusted annual rate of 628,000, beating expectations after May was revised higher. Sales are down 5.6% from a year ago. (New home sales are captured at the contract signing and reflect recent housing market activity.)

The South drove the gains, rising 9.9% to 412,000. The West fell 22.4% to 104,000, a second consecutive drop; that region is down 24.6% from a year ago. The Northeast and Midwest rose 3.6% and 2.5%, respectively.

The median price of a newly sold home dropped 3.3% to $398,300, the lowest since July 2025 and 2.7% below year-ago levels. The average price fell 9.5% to $475,400.

We are seeing the mix of sales move down the price ladder. Nearly one quarter of homes went for under $300,000, up from 18% from May and the highest share so far this year. Just over half sold for under $400,000, edging up from 46% in May. Builders are attempting to attract entry-level buyers. 

Incentives play a key role.  The share of builders cutting prices rose to 37% in July from 35% in June and 32% in May, with the average discount holding at 6%. Sales incentives ran at 63%, the 16th consecutive month at 60% or above. Builder sentiment has been pessimistic for 15 straight months, the longest stretch since 2012. Selling less expensive homes protects volume and margins at a time when land, materials, labor and regulatory costs are all rising.

The supply of new homes for sale inched down to 9.3 months, down from 9.4 in May but above 9.0 a year ago; about a six-month supply is considered to be balanced between buyers and sellers. 

The number of homes for sale where ground has not been broken yet has increased to 113,000, up 13% from a year ago, while those under construction fell 10% to 254,000. Builders are holding onto lots and slowing new construction, consistent with single-family permits falling to their lowest level in nearly a year.

Finished homes are sitting on the market longer. The median completed home took 3.6 months to sell in June, up from 2.6 months a year ago and rising every month this year. It is taking longer to move new homes.  

Separately, existing home sales fell 2.4% in June to a seasonally adjusted annual rate of 4.1 million, below expectations for a flat reading, though still 2.8% above a year ago. Sales are captured at the contract closing and reflect activity from a few months prior. 

The Northeast was the only region to post higher sales. Inventory slipped 0.6% to 1.56 million units, or 4.6 months' supply. The median price hit an all-time high of $440,600, up 1.8% from a year ago and the 36th consecutive annual increase. 

Mortgage rates have risen for two straight weeks. The 30-year fixed averaged 6.58% in the week ending July 23, up from 6.55% the prior week and below 6.74% a year ago. Rates averaged 6.49% in June. 

Brace for more increases on a jump in the 10-year Treasury bond yield this last week; it hit the highest level in over a year as the war in Iran escalated and fears of inflation flared.  

The rise in inflation is broader based than energy prices or tariffs alone, which is pushing the Federal Reserve closer to rate hikes. Lenders need to be compensated for future inflation, which is one of the reasons derailing inflation is so critical for mortgage rates and the housing market. Public and private debt issuance has picked up, which is another factor in buoying long–term bond yields.