Price cuts and smaller floor plans are pulling buyers back to new construction, but builders are flashing caution
New home sales in the US reached their fastest pace in eight months in August. Builders used price cuts, incentives and smaller floor plans to bring payment-conscious buyers back to model homes.
Sales of new single-family houses ran at a seasonally adjusted annual rate of 684,000 last month, up 6.4% from July. The figures come from estimates released Thursday by the US Census Bureau and the Department of Housing and Urban Development (HUD).
That was the strongest reading since December 2025, though still 2% below the August 2025 pace of 698,000.
The Census Bureau also revised July higher, to 643,000 from 607,000. That revision reshapes what first looked like a steep July retreat in new home sales.
"New-home sales bounced back in August as builders continue to meet buyers where their budgets are," said Sam Williamson, senior economist at First American.
"Price cuts, incentives and a shift toward smaller, more affordable homes are helping builders get deals across the finish line, keeping new construction a relative bright spot in an otherwise challenging housing market."
The gains were uneven across regions. Census data showed sales jumped 84.9% in the Midwest and 6.9% in the South. They fell 36.1% in the Northeast and 15.2% in the West.
New home prices hold near a five-year low
The median new-home price was $393,700 in August. That was up 0.4% from July but down 5.8% from a year earlier. The average price fell 9.1% from July to $478,700.
According to Williamson, 52% of August sales were priced below $400,000, up from 46% a year earlier. Another 74% came in under $500,000, compared with 65% a year earlier.
"Some of that change reflects builder discounts, but product mix is also playing an important role as builders construct and sell smaller homes," he said.
New homes have now been cheaper than existing homes for six straight months. Williamson put the gap at $35,400.
Meanwhile, the resale market slowed: the National Association of Realtors (NAR) reported that existing-home sales fell 2% in August to a 3.98 million annual pace.
What builder sentiment means for broker pipelines
The rebound came even as financing got more expensive. The 30-year fixed rate averaged 6.95% last week, its highest level since January 2025, according to Freddie Mac.
Builder sentiment weakened at the same time. The National Association of Home Builders (NAHB) reported builder confidence dropping to its lowest point in a year in September. The share of builders cutting prices rose to 38%, and 66% offered incentives.
"The need to work harder for every sale has pushed builder sentiment to its lowest level in a year," Williamson said.
Financing activity points the same way. The Mortgage Bankers Association (MBA) reported new-home mortgage applications falling to their 2026 low in August.
Darshit Chokshi, chief executive of Aequitas Mortgage, has cautioned that incentives do not close the affordability gap on their own. "New build homes are still priced very high," Chokshi previously told Mortgage Professional America.
Inventory was unchanged at 483,000 homes. Months' supply eased to 8.5 from 9.0, which is still well above the four-to-six-month range typically associated with a balanced market.
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