Homebuyers continued to respond to market headwinds like high mortgage rates and economic uncertainty and failed to be drawn in by builder sales incentives.
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Sales of newly constructed single-family homes dropped 13.7 percent in May 2025 from the previous month, as homebuyers continued to respond to market headwinds like high mortgage rates and economic uncertainty and failed to be drawn in by builder sales incentives.
The seasonally adjusted annual rate of sales hit 623,000 in May, which was 6.3 percent below the May 2024 rate of 665,000, the U.S. Census Bureau and U.S. Department of Housing and Urban Development reported on Wednesday. The figure represented the most severe drop in new-home sales in nearly three years.
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The report comes on the heels of the Census Bureau and HUD’s report last week showing that housing starts slid by 10 percent in May to their lowest level since 2020.
“New home sales plunged in May,” Navy Federal Credit Union Chief Economist Heather Long said in a statement sent to Inman. “The spring and summer are shaping up to be very tough for the real estate market. Buyers are staying on the sidelines as they worry about uncertainty and high mortgage rates. New-home inventories edged up in May and remain at elevated levels. Buyers are waiting for deals and there just aren’t many of them right now.”
The seasonally adjusted inventory estimate for new homes was 507,000 at the end of May 2025, 1.4 percent above April 2025’s estimate and 8.1 percent above inventory levels in May 2024.
The figure represents 9.8 months of supply of new homes at the current sales rate, which is 18.1 percent above the April 2025 supply of 8.3 months, and 15.3 percent above May 2024 levels of 8.4 months.
In May 2025, the median sales price of new homes sold was $426,600, 3.7 percent above the median price in April and 3 percent higher than the median sales price in May 2024.
The average sales price for new homes sold in May 2025 was $522,200, 2.2 percent higher than April and 4.6 percent higher than the average in May 2024.
