Challenging affordability conditions, elevated interest rates and economic uncertainty continue to act as headwinds on the housing sector as many potential buyers continue to stay on the sidelines.
Sales of newly built single-family homes edged 0.6% higher in June, rising to a seasonally adjusted annual rate of 627,000, according to newly released data from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. This marks a 0.6% increase from May’s unrevised figures. However, this is 6.6% below the June 2024 level. June new home sales are down 4.3% on a year-to-date basis. The past two months have been the slowest sales pace since October of last year, as mortgage rates averaged above 6.8% in June.
A new home sale occurs when a sales contract is signed, or a deposit is accepted. The home can be at any stage of construction: not yet started, under construction or completed. In addition to adjusting for seasonal effects, the June reading of 627,000 units is the number of homes that would sell if this pace continued for the next 12 months.
New single-family home inventory continued to rise with 511,000 residences marketed for sale as of June. This is 1.2% higher than the previous month, and 8.5% higher than a year ago. At the current sales pace, the months’ supply for new homes remained elevated at 9.8 compared to 8.4 a year ago. A measure near a six months’ supply is considered balanced.
As expected, the combined new and existing total months’ supply has risen over the last few months to a balanced 5.4 months due to continued buyer hesitation in both new and existing home sales markets. Elevated mortgage rates and sustained price levels continue to limit purchasing power, particularly among first-time and middle-income buyers.
A year ago, there were 94,000 completed, ready-to-occupy homes available for sale (not seasonally adjusted). By the end of June 2025, that number increased 21.3% to 114,000. However, completed, ready-to-occupy inventory remains just 22% of total inventory, while homes under construction account for 54%. The remaining 24% of new homes sold in June were homes that had not started construction when the sales contract was signed.
The median new home sale price edged down 4.9% in June to $401,800. This is down 2.9% compared to a year ago. In terms of affordability, the share of entry-level homes priced below $300,000 has been steadily falling in recent years. Only 14% of the homes were priced in this entry-level affordable range, while 28% of the homes were priced above $500,000. Most of the homes were priced between $300,000-$500,000.
Regionally, on a year-to-date basis, new home sales are down in all four regions, falling 1.6% in the South, 4.0% in the West, 8.5% in the Midwest, and 25.6% in the Northeast.
Discover more from Eye On Housing
Subscribe to get the latest posts sent to your email.
This article was originally published by a eyeonhousing.org . Read the Original article here. .
