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If you’re looking to buy a new home, now might be the time to pounce.
There were more newly-built homes sitting on the market in July than there have been since the depths of the Great Recession, new data from the US Census Bureau and the US Department of Housing and Urban Development shows.
Last month, 121,000 new homes were waiting to be bought, up from 103,000 in July 2024 and higher than any July since 2009, when there were 126,000.
Sales of new single-family homes fell to 652,000 in July — an 8.2% drop from July 2024, the Census Bureau and HUD reported.
Sales of existing homes are also falling. According to the National Association of Realtors, fewer were sold last year than in any year since 1995.
There are a few major reasons homes are languishing on the market.
Before President Donald Trump’s election in 2024, economists and housing researchers expected cooling inflation and interest rate cuts to boost home sales this year. But the administration’s tariff policies have led to higher-than-expected inflation and mortgage rates, and consumer sentiment remains dismal.
In February, the Fannie Mae Home Purchase Sentiment Index fell year over year for the first time since 2023, largely due to consumer concerns about high mortgage rates.
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Five of the six HPSI components fell again in June as consumers worried about job security, mortgage rates, home prices, home sales, and household income. The portion of consumers who think it’s a good time to buy a home rose, however.
A combination of stubbornly high prices and borrowing costs has kept homeownership out of reach for a huge portion of potential first-time buyers, and made existing homeowners with lower mortgage rates less willing to sell and buy a new home, which is known as the “lock-in effect.”
“If you’re not sure what’s going to happen in the US economy, then you probably don’t want to make a massive financial decision,” Hannah Jones, an economic research analyst at Realtor.com, told BI earlier this year.
The picture is worrying for homebuilders and home sellers. And it’s not clear that potential buyers will see housing affordability or their concerns about the broader economy improve in the foreseeable future.
The glut of homes on the market should be good news for buyers, some of whom are benefiting from less competition and lower prices. The median sales price of a new home has slipped 5.9% over the last year to $403,800, the Census Bureau and HUD reported. But despite slowing home price growth, housing still costs a lot more than it did before the pandemic boom in buyer demand.
And the picture isn’t uniform across the country. Demand is still high and prices are still trending upward in markets across the Northeast, Midwest, and Southern California, while they’re falling in many markets in the South and Southwest.
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