Winter weather and market constraints put significant downward pressure on new-home sales to start off 2026, according to the latest data from the Department of Housing and Urban Development and the Census Bureau.
The New Residential Sales report for January found that new-home sales fell a whopping 17.6% to a rate of 587,000 (compared to December’s rate of 712,000). Sales were also down year-over-year by 11.3% (662,000 in January 2025). January’s data is at a low level not seen in almost 3.5 years, since October 2022.
National Association of Home Builders (NAHB) Chairman Bill Owens characterized the January data as “typical monthly volatility, as well as weather-related disruptions,” especially for the Northeast and Midwest, who faced large winter storms during the month. He noted that “on a three-month moving average basis, sales were 688,000, remaining broadly in line with the 685,000 pace seen a year ago.”
Bright MLS Chief Economist Lisa Sturtevant added that similar to the “slow start” observed in existing-home sales activity, “the new-home market has been constrained by affordability challenges, economic uncertainty and, in some parts of the country, unseasonably cold winter weather.”
The recent NAHB data on builder sentiment reflects these challenges and this data, remaining in the negative territory (below the 50 point breakeven mark) for another month in February.
“Builders are increasingly using incentives, including price reductions and upgraded features, to attract buyers and sustain market momentum amid ongoing affordability challenges,” added Owens.
Regionally, new-home sales were down month-over-month in all four regions: 44.7% in the Northeast, 33.9% in the Midwest, 8.1% in the South and 21.6% in the West. Year-over-year, results were a little more mixed: no change in the Northeast, up 18% in the Midwest, down 8.8% in the South, down 28.7% in the West.
Inventory sat at an estimated 476,000 homes at the end of January, up 0.4% from December but down 4% from last January’s estimate of 496,000. This is a 9.7 months’ supply at the current sales rate, which is up both monthly and yearly by 21.3% and 7.8%, respectively.
Additionally, the median new-home sales price clocked in at $400,500—down both month-over-month and year-over-year by 4.5% and 6.8%, respectively.
Overall, Realtor.com® Senior Economist Joel Berner said that this is a “very disappointing result for new-home sales.”
“Things had been shaping up nicely for buyers, with plenty of supply in the new-home market and mortgage rates falling, but buyers seem to be spooked,” he continued. “Keep in mind that this data represents a month that occurred prior to the initiation of the conflict in Iran, which is driving rates up and sparking more economic uncertainty for the market to deal with going forward.”
Sturtevant noted that while there is still pent-up demand in the market, “many prospective homebuyers are holding back as the job market weakens, oil prices surge and mortgage rates retreat from their sub-6% levels.”
“It is going to be a slow start to the spring home-buying season, and new homebuilders will probably see less traffic this spring than they did a year ago,” she continued. “The inventory of existing homes is on the rise, and home sellers are increasingly willing to drop their asking prices or offer concessions or credits, giving buyers more leverage in the existing-home market.”
