The market posted a surprising August resurgence amid lower mortgage rates
New-home sales in the United States surged to a seasonally adjusted annual rate of 800,000 in August 2025, the fastest pace since early 2022, according to fresh data from the US Census Bureau and Department of Housing and Urban Development. The increase marks a 20.5% jump from July’s rate of 664,000.
The figure easily outpaced consensus forecasts of 650,000, signaling a burst of buyer activity in a market that has been anything but predictable.
"Lower mortgage rates, along with builder incentives and discounts, helped unlock demand in August as new-home sales soared to an annualized pace of 800,000 — the fastest since early 2022 and well above consensus expectations of 650,000."
According to the National Association of Home Builders (NAHB), 39% of builders reported cutting prices in September, the highest share since the pandemic, up from 37% in August.
The average price cut held steady at 5%, a trend in place since last November. Sales incentives were used by 65% of builders, nearly unchanged from the previous month.
The surge in sales helped whittle down the inventory of new homes for sale to 490,000 units, the lowest level seen this year and 1.4% below July’s estimate. Months’ supply fell to 7.4, down from 9.0 in July and 8.2 a year ago, reflecting the market’s ability to absorb excess stock.
However, the median sales price climbed to $413,500, up 4.7% from July and 1.9% from August 2024, while the average price jumped 11.7% month-over-month to $534,100.
Builder confidence, however, remained subdued. The NAHB/Wells Fargo Housing Market Index held steady at 32 in September, well below the threshold of 50 that signals optimism.
“Builder sentiment around future sales remains subdued, though it ticked up slightly in response to lower rates. Demand is there, but it’s taking incentives to coax hesitant buyers off the sidelines. Whether this momentum can be sustained remains to be seen,” Kushi said.
Still, expectations for future sales ticked up, buoyed by a 23-basis-point drop in the average 30-year fixed mortgage rate over the past month, now at 6.35%—the lowest since October 2024, according to Freddie Mac.
The Federal Reserve’s recent 25-basis-point cut could help lower borrowing costs for both developers and buyers.
Kushi cautioned against reading too much into a single month’s data. “That said, one month does not make a trend. It’s important to consider the wide confidence intervals in the data and the fact that these figures don’t account for cancellations. Nevertheless, it’s a welcome sign of buyer life and positive progress in a still-challenging market.”
Despite the August rebound, the US housing market continued to struggle with high prices, limited supply, and shifting buyer preferences. According to the Census Bureau and US Department of Housing and Urban Development (HUD), housing starts dropped in August to an annual rate of 1.31 million, down 8.5% from July and 6% from a year ago.
Building permits also fell to 1.31 million, a 3.7% decline from July and 11.1% lower than last August. This slowdown has been driven by a weaker job market and a growing number of unsold homes.
Stay updated with the freshest mortgage news. Get exclusive interviews, breaking news, and industry events in your inbox, and always be the first to know by subscribing to our FREE daily newsletter.
