U.S. new-home sales posted an unexpectedly sharp gain in August 2025, helped by a dip in borrowing costs that lured buyers back into the market.
Purchases of newly built single-family homes jumped 20.5% from July to an annualized pace of 800,000, the fastest since early 2023, according to government data released Tuesday. That figure followed an upward revision to July sales and marked a 15.4% increase from a year earlier. The three-month moving average climbed to 713,000, up from 656,000 in July.
Despite the surge, sales remain 1.4% lower on a year-to-date basis, underscoring the market’s volatility in the face of shifting mortgage rates.
“New home sales experienced a significant surge in August, while builder confidence held steady at a low reading in September,” said Buddy Hughes, chairman of the National Association of Home Builders. “While this month’s figure may be subject to downward revision, we do expect a general improvement in sales over the coming months, supported by the recent decline in mortgage rates.”
The average 30-year fixed mortgage rate fell to 6.26% last week, the lowest since October 2024, after sliding 32 basis points in four weeks, according to Freddie Mac. The Federal Reserve’s recent rate cut has added momentum, said Jing Fu, senior director of forecasting at NAHB, who expects demand to strengthen into the final quarter of 2025.
Inventory Tightens
The supply of new homes eased for a third consecutive month, slipping to 490,000 units in August. That’s 1.4% below July but still 4% higher than a year earlier. At the current sales pace, builders held 7.4 months of supply, down from 8.2 months in August 2024.
The median sales price of a new home was $413,500, up 1.9% from a year earlier.
Builders Lean on Incentives
Developers continued to rely on discounts and promotions to spur activity. About 37% of builders cut prices in August, while two-thirds offered sales incentives, according to NAHB surveys.
Regional Picture
Sales were mixed across regions year-to-date:
- Northeast: down 22%
- Midwest: down 3.9%
- West: down 7.3%
- South: up 3.3%
The South, the nation’s largest housing market, remains the only region posting growth so far in 2025.
