What happened this month
New home sales picked up slightly in June from an upwardly-revised but still rather weak May readout. The seasonally adjusted annual pace of new home sales reached 628,000, up 1.6% month over month but down 5.6% year over year. The market remains sluggish, with months of supply reaching 9.4–firmly in buyers’ territory. New home sale prices are in retreat, with the median price from June coming in at $398,300, well below the June existing home median of $440,600. Our research has shown that builders are more likely to offer price cuts than existing home sellers in recent quarters, and this aggressive price discovery for attracting increasingly skittish buyers is evident.
Sales in the West region are especially soft, with the June figures coming in 22.4% below May’s and 24.6% below last June’s. This is not a one-off observation, Western sales fell sharply last month as well and are 10.1% behind 2025 pacing in year-to-date sales. Only the Midwest (+2.6%) leads 2025 in sales for the year to date. The Northeast had the strongest June in terms of new home sales, up 3.6% month over month and up 16.0% year over year, but the volume of sales there remains significantly lower than in the other regions. The inventory recovery out West, where there are 11.7% more homes for sale now than there were before the pandemic, has led to intense competition between builders and existing home sellers over a buyer pool that is increasingly pinched by affordability concerns. Builders are having to offer price cuts and incentives at high rates, and the sales still are not coming in at the same pace.
More new homes are on the market
The number of new homes for sale held steady in June, but the number of unstarted homes for sale rose to its highest level of the year. The number of unstarted homes is now almost equal to the number of completed homes for sale, reflecting the pullback in spec building that many builders have decided upon. With the current challenges of the market, builders do not want to be left with completed inventory they cannot sell easily.
What does this mean for buyers and builders?
Though it is encouraging to see these June new home sales figures rebound from May’s disappointment, the annualized pace for June (628,000 new homes sold) is still well below the actual total sales from 2025 (678,000) and 2024 (686,000). Builders are facing a challenging set of circumstances as their costs continue to rise at the same time that competition from the existing home sector grows and buyer confidence wanes. For buyers willing to buck the trend of homebuying pessimism, new construction offers a chance for a great deal. Incentives and price reductions abound, and buying new can save money in the long run as well.
