U.S. new-home sales fall in May as mortgage rates stay high
May new-home sales slid 7.3% to 580,000 as 6.47% mortgage rates and $424,900 median prices kept buyers on the sidelines.
New U.S. single-family home sales fell 7.3% in May to a seasonally adjusted annual rate of 580,000, as mortgage rates near 6.5% and stubborn prices kept buyers away even as supply remained badly needed. The U.S. Census Bureau and the U.S. Department of Housing and Urban Development released the figures on June 24, showing sales also ran 6.8% below May 2025 and down from a revised 622,000 in April.
The pricing picture underscored why demand stayed weak. The median new-home price in May was $424,900, little changed from a year earlier, while the average sales price reached $540,600. At the same time, months’ supply of new homes rose to 9.7 from 9.3 in April, a sign that houses are taking longer to move even as builders try to clear inventory.
Mortgage costs remained the main drag. Freddie Mac said the average rate on a 30-year fixed mortgage was 6.47% for the week ending June 18, down from 6.52% the previous week but still well above levels buyers were accustomed to before 2022. Rates have climbed by about 50 basis points since the conflict with Iran began at the end of February, a reminder that geopolitical tensions can spill into housing when oil prices and Treasury yields move higher.
The weakness in new-home sales fits a broader picture of strain across the housing sector. The National Association of Home Builders said builder confidence fell to 35 in June, the 14th straight month below 40, and 35% of builders were cutting prices, up from 32% in May. That suggests developers are leaning on discounts to keep traffic moving, but they have not yet been able to break the affordability logjam for ordinary buyers.
The market has not frozen everywhere. The National Association of Realtors said existing-home sales rose 3.2% in May to an annual rate of 4.17 million, with a median price of $429,300 and inventory at 1.55 million homes, equal to 4.5 months’ supply. Even so, the split between rising existing-home activity and sagging new-home sales shows how uneven the recovery remains, with higher borrowing costs continuing to shape who can buy and who must wait.
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