The real estate market’s inventory is up at the last count, but it is primarily existing homes entering the market. Are newly constructed home sales picking up, too? Not according to the latest findings of the U.S. Census Bureau and the Department of Housing and Urban Development (HUD).
The two agencies’ latest report on new-home sales, tracking sales up to May 2025, found a 13.7% monthly drop to a seasonally adjusted annual rate of 623,000. This is a higher than expected drop. Previously, in April, new-home sales saw a slight increase to a 743,000 annual rate, so these results mark a reversal of course.
While the amount of new homes being sold is down, the amount of new homes for sale is up slightly month-over-month. The amount of new homes for sale at the end of May was reported as 507,000, compared to the April estimate of 500,000. Currently, the market sits at 9.8 months of inventory between homes for sale and rate of sale.
Median sales price on newly constructed homes during May was $426,600, 3.7% higher than median price in April. This higher median price could correlate to the simultaneous findings of less new-home sales.
Consumer sentiment toward the economy has been improving, but there is continued long-term wariness over possible tariffs. Homebuilder confidence has also fallen to a low in recent months, driven both by tariff/policy uncertainty and concerns that homebuyers are not entering the market due to the same uncertainties.
The Federal Reserve has said it is holding off adjusting interest rates to observe the economic impact of tariffs, but is predicting that those effects will begin showing up in the summer. A sharp decline in new-home sales provides some evidence of consumer reticence.
Dr. Selma Hepp, chief economist at Cotality (formerly CoreLogic), suggested this is the case in a press release about the current state of the housing market.
“While there is some hope mortgage rates may continue easing, there is still an air of pessimism among potential homebuyers,” said Hepp. “Fears that the economy will continue to deteriorate for the next six months are fueling hesitation among many households to make large purchases.”
However, Hepp also noted higher consumer confidence compared to “high levels of tariff-related anxiety in April.”
Regional breakdown
Seasonally adjusted, all but one of the four major U.S. census regions saw a monthly decline in new-home sales and new homes for sale. The one exception, the Northeast, saw a 32.1% increase month-over-month and an annual increase of 48%. The Northeast also saw the least amount of homes sold, at an annual rate of 37,000.
On the other hand, the South saw a sizable decline of 21% monthly and 15.5% annually, yet the region also posted the highest number of actual homes sold by far (349,000).
The Midwest saw a similar but smaller trend, dropping 7.1% monthly and 3.7% annually (78,000 sold at an annual rate). The West saw a monthly decrease of 5.9%, but compared to May 2024, new-home sales were up by 8.9%. The region was a distant second to the South in number of homes sold at an annual rate, at 159,000.
For the full new-home sales index, click here.
