What's behind the slowdown in new home demand?
Consumers are hitting a wall in the housing market, both financially and emotionally, as stubbornly high mortgage rates and economic uncertainties temper new home sales, according to the April 2025 New Home Market Update released jointly by Zonda and NewHomeSource.
The report indicated that housing affordability remains at its lowest point in three decades, largely due to persistent high mortgage rates. Beyond the financial strain, potential buyers are grappling with concerns over job security and the lingering impact of tariffs, creating a sense of mental exhaustion.
“New home sales have been choppy to start the year but remain above 2019 levels,” said Ali Wolf, chief economist for Zonda and NewHomeSource. “Today’s sale volume levels are fueled by the fact that builders are motivated sellers, though. Builders continue to offer incentives to drive sales, but we’re seeing price cuts play a larger role in some areas.”
April’s new home sales remained flat month-over-month and saw a 6.9% decrease compared to April 2024. The Zonda Market Ranking held steady at “average” for the fourth consecutive month. While quick move-in (QMI) inventory—homes ready for occupancy within 90 days—has increased by 22% year-over-year to an average of 2.3 QMIs per community, it has not reached the “alarming levels” seen in 2022. Seattle, Charlotte, and Washington, D.C., experienced the most significant year-over-year growth in QMIs.
Pricing across the market showed mixed results, with entry-level home prices decreasing by 0.8% to $328,540, and move-up homes declining by 0.2% to $518,931. In contrast, high-end homes saw a modest 0.4% increase, reaching $910,304. Builders continued to adjust strategies, with 35% lowering prices in April, 49% holding steady, and 16% raising them. Incentives remained a key tool, offered on 56% of to-be-built homes and 75% of quick move-in supply.
How are rising mortgage rates and economic uncertainties affecting your decision to buy a home this year? Share your insights below.
