Sales of new home sales slipped 0.6 percent in July, dropping to an annual pace of 652,000 units after June figures were sharply revised upward. The July total exceeded analysts’ forecasts of 630,000 units but remained 8.2 percent below the pace recorded in July 2024.
New home sales rose 11.7 percent in the West, offsetting declines in other regions. The Midwest saw a 6.6 percent drop, and the South fell 3.5 percent. The Northeast held steady with no change from June. With mortgage rates down 25 basis points since early August, some buyers may return to the market in late summer and early fall.
New Home Sales Trends
The Commerce Department reported that sales of newly built single-family homes dipped from a revised 656,000 units in June to 652,000 units in July. At the current sales pace, it would take 9.2 months to exhaust the existing supply, assuming no new listings. That marks a slight slowdown from the 9.4-month supply in June but remains well above the 7.9-month supply recorded in July 2024.
New listings edged down for the third time in four months, landing at 499,000 units. Despite the modest monthly decline, inventory levels remain elevated. Builders nationwide face an inventory glut that could slow new construction starts in the coming quarters.
Regional Sales Activity
In the West, which includes California, builders reported robust demand from buyers drawn by falling borrowing costs and a shortage of resale homes. Sales climbed by more than 11 percent, the largest gain among the four regions. Builders in the San Gabriel Valley and Inland Empire are tracking the uptick as an early sign that local prospects may improve.
By contrast, the Midwest and South markets cooled. In the Midwest, sales declined in cities such as Chicago and Cleveland, reflecting lingering affordability challenges. Southern markets, including major metros like Dallas and Atlanta, saw a 3.5 percent fall as rising construction costs and mortgage rates weighed on buyer interest. The Northeast held flat, with New York and Boston reporting little change in new listings or contracts.
Inventory Challenges Ahead
Despite the monthly dip in new home listings, inventory levels remain a concern. The 9.2-month supply exceeds the six-month level that many economists view as balanced. High inventories could pressure builders to slow construction or offer incentives to attract buyers, pushing back on gains from lower mortgage rates.
Builders may adjust pricing or add incentives such as rate buydowns or closing-cost assistance to stimulate interest. At the same time, macroeconomic headwinds—including higher material costs and wage pressures—could continue to limit builder confidence.
Local buyers in El Monte, South El Monte, Baldwin Park, Rosemead, Arcadia, Temple City and Irwindale should watch for any regional shifts in available new-build inventory. With supply levels near record highs, prospective homeowners may find opportunities to negotiate on price or upgrades.
As the market enters the late-summer sales season, the outlook for new home sales hinges on the interplay of mortgage rates, builder incentives and broader economic trends. If rates hold at current levels or fall further, sales could pick up modestly in August and September. Builders will monitor these indicators closely to guide production and pricing decisions for the remainder of the year.
