A slight decline in mortgage rates, coupled with limited existing inventory, helped new home sales inch higher in February, in spite of persisting affordability issues that serve as major headwinds in a market that is just beginning to adjust to the new rate environment that has been just as persistent since 2022.
The latest figures released jointly by the U.S. Census Bureau and the U.S. Department of Housing and Urban Development show that sales of new single-family homes in February clocked in at a seasonally adjusted rate of 676,000. This is a 1.8% month-over-month increase from January’s revised rate of 664,000—and a 5.1% year-over-year increase from a February 2024 estimated 643,000.
The findings also showed that the seasonally adjusted estimate of new homes for sale at the end of February was 500,000. At the current sales rate, this represents 8.9 months worth of supply.
“New home sales have been roughly flat thus far in 2025, as ongoing limited inventory of existing homes in many markets continues to support the need for new homes,” said Buddy Hughes, chairman of the National Association of Home Builders (NAHB). “Although policy uncertainty may be holding back some homebuyer and business decisions, builders have hope that regulatory reform and tax policy extension will act as tailwinds later this year.”
Realtor.com® Senior Economist Joel Berner put the findings into context by noting that the buy range for consumers purchasing new homes jumped to account for the increased activity.
“This is a resumption of a trend that was bucked in January in which smaller and more affordable new homes make up a sizable portion of inventory and sales,” he said. “This is evidenced further by the breakdown of new home sales by price tier, in which February saw a huge jump in the $300,000 – $399,999 category. Thirty-four percent of new homes sold in February fall into this $300K-range category, the highest share in over a year, and seven percentage points higher than January.”
The report also found that the median sales price for the month of February was $414,500. Data also showed the average sales price for a home during the same timeframe was $487,100.
Bright MLS Chief Economist Lisa Sturtevant cast the for sale inventory of new housing in a historic light, noting that new home inventory is at its highest level since 2007. She also indicated that increased new home inventory has given rise to a more discerning buyer.
“There are signs that the new home market is shifting. The seasonally adjusted estimate of new homes available for sale was 500,000 in February, the highest new home inventory level since 2007,” Sturtevant said. “Overall, the inventory build-up suggests that new homebuyers are starting to pull back. Sales of new homes are expected to be lower this year for at least a couple of reasons. First, the growing inventory of existing homes for sale has given buyers more options. When the existing home inventory was historically tight, some homebuyers had no choice but to look at new construction. Now, buyers have gained some leverage and have more listings to choose from.”
Sturtevant also mentioned that the ongoing policies being implemented by the current administration are making their way into the thought process of homebuilders.
“A second factor that is worth watching is the pace of new home construction. Right now, new home inventory is rising because there are fewer buyers and homes that were started last year are sitting vacant. But some homebuilders are pulling back on starts and permits for new construction as they assess the potential impacts of tariffs and immigration policies.”
The report also showed that on a regional basis, new home sales increased 6.6% in the South and 20.6% in the Midwest, while falling by 13.6% in the West and by a sharp 21.4% in the Northeast.
Sturtevant went on to explain that regional differences in new home sales could potentially be attributed to weather.
“Sales in the Northeast were down nearly 50% year-over-year, potentially as a result of winter storms.”
For the full report, click here.
