The U.S. housing market is cooling, experiencing decreased new single-family home sales, with inventory rising and prices declining. June 2025 data indicates new home sales at an annual rate of 627,000, reflecting a year-over-year decline of 6.6%. High home prices and mortgage rates nearing 7% discourage buyers, prompting many to focus on modest improvements instead. Major builders are offering significant incentives, compressing margins to maintain sales volumes, with trends indicating buyers gaining leverage, particularly in the Sun Belt region.
Increased new home sales often indicate strong consumer confidence, greater employment, and accessible financing. Conversely, declines suggest waning buyer interest, affordability issues, or economic stress.
There’s no question that in many pockets of the Sun Belt-the epicenter of U.S. single-family homebuilding-buyers have gained a considerable amount of leverage this year and the market has softened.
In order to keep sales volumes steady, big homebuilders have compressed margins further and done bigger incentives or outright price cuts. Lennar is spending the equivalent of 13.3% of final sales price on incentives.
Sales were at a seasonally adjusted annual rate of 627,000 in June 2025. This is only 0.6% higher than May 2025, but 6.6% lower than June 2024.
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