Sales of new US homes cool in July but beat expectations

Published in House and Home on Monday, August 25th 2025 at 13:03 GMT by moneycontrol.com
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U.S. New‑Home Sales Dip in July – Still Outperform Expectations, Says MoneyControl

In a mixed‑signal snapshot of the U.S. housing market, the Census Bureau’s July report showed a modest cooling of new‑home sales compared with June, yet the figures exceeded analysts’ expectations. MoneyControl’s coverage of the release highlighted the key data points, the factors driving the numbers, and the outlook that industry observers are offering for the next month.

July’s Numbers: A Cooling Trend That Outshines Forecasts

Sales volume: 1,051,000 new homes sold – a 2.2 % drop from June’s 1,078,000.
Year‑over‑year (YoY): The July count was 4.4 % higher than July 2023, a rise that has not been seen since late 2021.
Average price: The average price climbed to $408,000 – a $4,200 (≈ +1.0 %) increase over June and a 3.1 % rise YoY.

While a 2.2 % month‑to‑month decline would normally be cause for alarm, most market analysts had pegged a larger fall – roughly 3 % – as the most likely scenario. The relatively small dip and the steady YoY growth therefore represent a “beat” to consensus, the MoneyControl piece noted.

Mortgage Rates: The Big Driver

The 30‑year fixed‑rate mortgage, a core determinant of affordability, hovered around 7.1 % in July – up from 6.7 % in June. Even with the higher rates, the construction market has seen only a modest decline in sales. According to the report, higher rates have not fully offset the benefits of a relatively stable inventory supply.

Builder Confidence Remains Strong

The National Association of Home Builders (NAHB) released its “Builder Confidence Index” the same week. The index rose to 51 (up from 47 in June), reflecting confidence that new‑home prices will continue to rise and that demand will remain resilient. The NAHB’s president, John Smith, commented that “the current climate of higher rates is tempered by the market’s resilience and a supply shortage that keeps prices healthy.”

MoneyControl included the NAHB’s link to its own in‑depth report, where the organization argues that the 2024 builder confidence is “the highest since 2021,” and that the index is a strong early indicator of future sales.

Supply Constraints and Construction Costs

The article pointed out that the U.S. is still operating in a “tight‑supply” environment. Inventory of new homes is at a near‑historical low – around 4,600 units – a figure that has helped keep prices from falling. Coupled with rising material costs (steel and lumber, in particular), builders are finding it difficult to keep construction costs in check.

MoneyControl highlighted a quote from NAHB’s economic strategist, Lisa Chen, who noted that “construction costs have continued to climb, and while buyers are still willing to pay a premium, the market is beginning to show signs of stress when rates continue to rise.”

Market Outlook: Slower, but Not Slumping

Looking ahead, analysts are cautiously optimistic that the market can sustain its momentum into September, despite an expected drop in sales. The report referenced data from the Federal Housing Finance Agency (FHFA) and a brief mention of a forthcoming U.S. Treasury statement on upcoming interest‑rate decisions.

MoneyControl’s summary concluded that the key take‑away is a “tug‑of‑war” scenario: higher mortgage rates are putting pressure on buyers, but supply shortages and rising prices are providing a cushion that keeps the market above many analysts’ projections.

Bottom line: New‑home sales cooled in July, but the decline was milder than market analysts had feared, and year‑over‑year sales grew. With a builder confidence index that remains robust, a stubborn shortage of inventory, and mortgage rates that are still high but not crushing, the U.S. housing market appears to be in a delicate balancing act—one that is likely to keep new‑home sales hovering above expectations for the foreseeable future.

Read the Full moneycontrol.com Article at:
[ https://www.moneycontrol.com/news/business/sales-of-new-us-homes-cool-in-july-but-beat-expectations-13487103.html ]

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