Sales fell in July but came in higher than many had expected
New single-family home sales were down in July, falling by 0.6% to a seasonally adjusted annualized rate of 652,000 units as stubborn mortgage rates continued to weigh against the housing market.
The decline followed a significant upward revision to June sales, which the Commerce Department’s Census Bureau said came in at a rate of 656,000 units – up from the previously reported 627,000.
Despite the decrease, the pace of sales was still higher than many observers had expected, and First American’s deputy chief economist Odeta Kushi described both the July figures and the June revision as an “upside surprise.” A Bloomberg survey of economists revealed expectations of a 630,000 annualized pace last month.
But the housing market is still struggling to find its feet in 2025, with no sign that mortgage rates are set for a pronounced drop anytime soon and economic uncertainty continuing to cloud the outlook. Kushi highlighted that July sales were 8% lower compared with the same time last year, while inventory remains well above pre-pandemic averages.
What’s more, the sluggish pace of sales could also suggest that incentives aimed at boosting homebuilding aren’t proving as effective as first hoped.
“Builders have relied heavily on incentives, such as mortgage rate buydowns, upgrades, and even price reductions, to support demand and maintain an edge over the existing-home market,” Kushi wrote.
“However, the recent pattern of sales – holding at relatively subdued levels – suggests these measures are becoming less effective amid strained affordability, rising resale inventory, and macroeconomic uncertainty.”
July sales fell in the South and Midwest, but rose by 11.7% in the West. Meanwhile, the median sales price of a home fell by nearly 6% year over year, slipping to $403,800 amid a wider market slowdown.
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