What happened this month
In a long-awaited release of September and October data, new-home sales picked up considerably in September and held pace in October, with the latter month registering an 18.7% year-over-year growth rate of 737,000 single-family homes on a seasonally adjusted annual basis. The number of new homes for sale rose slightly year over year, but the increased pace of sales drove the months’ supply of new homes down to 7.9 months compared to 9.3 months last year at this time. The median sales price fell to $392,300 for new homes in October, down 8% from the October 2024 median price of $426,300, as builders are eager to move their inventory and are pricing to do so.
The uptick in sales activity mirrors what we saw in October in the existing-home space, as lower mortgage rates spurred buyers to make purchases. Interestingly, though, we again see the median sales price of new homes ($392,300) significantly below the median sales price of existing homes ($415,200). Two main things are at play here: Builders are more motivated sellers than regular homeowners, many of whom are reluctant to cut prices and would rather delist their home than sell below their target, and builders continue to deliver smaller and more affordable new homes in more affordable areas.
Regionally, the South (+42.1%) and Midwest (+21.3%) drove the uptick in sales volume year over year, while the Northeast (-40%) and West (-24.8%) lagged. A strong majority of new-home sales take place in the South, so the strength in this region can mask some weakness in others. Even on a nonseasonally adjusted basis, October was the strongest month of 2025 for the South in terms of the number of new homes sold.
For the first time in 2025, over 50% of the new homes sold went for under $400,000 in October. The relief from mortgage rates is particularly helpful to first-time homebuyers and buyers right on the margin of affording a home, and we see this segment picking up sales volume in a meaningful way.
