Housing News

New Home Sales Skyrocket to Three-Year High

Homebuyers snapped up lots of newly constructed homes in August.

New home sales hit their highest level in three-and-a-half years, thanks to the combination of falling mortgage rates and homebuilders offering more incentives and cutting prices.

The sales of newly constructed homes rose by 20.5% in August compared to July, according to a new report from the U.S. Census Bureau and U.S. Department of Housing and Urban Development.

New home sales were also up more than 15% from the same month last year.

“Falling mortgage rates and more price parity with existing homes likely drove more buyers into the new home market in August,” said Bright MLS Chief Economist Lisa Sturtevant in a statement. The multiple listing service covers the mid-Atlantic region.

Mortgage rates have been on the decline for basically all of August and September thus far. They averaged 6.26% for 30-year, fixed-rate loans in the week ending Sept. 18, according to Freddie Mac data.

“This downward trend in rates, combined with the recent Fed interest rate cut, signals a positive outlook for future housing demand,” Jing Fu, senior director of forecasting and analysis at the National Association of Home Builders, said in a statement.

“If this momentum continues, we expect new home sales to gain traction as more buyers reenter the market in the final quarter of 2025,” Fu added.

First American Deputy Chief Economist Odeta Kushi noted that the increase in new home sales has been aided by more homebuilders cutting the prices of their new homes.

 “Demand is there, but it’s taking incentives to coax hesitant buyers off the sidelines,” Kushi said in a statement. “Whether this momentum can be sustained remains to be seen.”

The NAHB noted that in August 37% of builders reported cutting prices, while 66% said they were using sales incentives.

These lower prices and deal sweeteners are making it cheaper to buy a new home than an existing one. In her statement, Sturtevant noted that over the summer, the median price of a newly constructed home dropped below the median price for an existing home.

The median price of a new build in August was $413,500, according to the report. That was $9,000 less than the typical cost of an existing home, priced at a median of $422,500 in July, according to the most recent data available from the National Association of Realtors.

However, on the new construction side, there was an uptick in new homes priced at $300,000 and under, according to the new home sales report.

Much of the increase was driven by sales in the Northeast, where new home sales rose by a massive 72.2% in August compared to July.

One of the consistent observations from market observers is that one month does not make a trend. So, it will be important to monitor new home sales going forward to see if there is a true market shift underway.

“While the August sales numbers are good news for the home building sector, it is possible that this is a one-month blip,” Sturtevant said. “With the inventory of existing homes on the rise, the new home market could still remain sluggish through the end of the year. Builders focusing on smaller and more affordable homes will likely see the strongest demand.”