Why New Homes Are Losing Ground to Resales

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Sales of newly built homes dipped last month as affordability pressures took center stage. According to the U.S. Census Bureau and Department of Housing and Urban Development, “Signed contracts for new single-family homes were at a seasonally adjusted annual rate of 652,000 last month, down 8.2% from a year earlier.” While sales were also down slightly from June, a revised June estimate softened the blow.

Prices Hit a Surprising Low

In July, the typical sales price for a new home dropped to $403,800—about 5.9% lower than the same time last year and the lowest level seen since November 2024. This marks the first time in years that new construction is being priced below existing homes. According to Realtor.com® Senior Economist Joel Berner, prices for existing homes and new builds are trending in different directions. Even with builders cutting prices more aggressively than resale sellers, the latest sales figures show that these reductions still aren’t enough to meaningfully speed up new-home purchases.

Inventory Builds Up

Inventory levels highlight the slowdown in demand. By the end of July, there were an estimated 499,000 new homes on the market—about 7.3% more than a year earlier. At the current pace of sales, that equates to roughly 9.2 months of supply. This level of inventory signals more options for buyers, but also increased pressure on builders to offer discounts and incentives.

Builder Incentives Surge

Builders have stepped up their efforts to attract hesitant buyers, with the National Association of Home Builders noting that incentives are now at their highest level in five years, offered by about two-thirds of builders. Price reductions remain widespread as well—37% reported lowering prices in August, averaging around 5%. Still, as BrightMLS Chief Economist Lisa Sturtevant points out, even with these offers, many buyers are favoring resale homes where they feel they have more choice and negotiating power.

Existing Homes Gain the Advantage

Interestingly, buyers are showing more interest in resale properties. “Sales of existing homes rose unexpectedly last month… up 2% from June.” While price growth for existing homes has flattened, the wider range of available properties combined with negotiating leverage is drawing more buyers away from new construction.

Affordability Remains the Key Challenge

Affordability continues to be the market’s biggest barrier. “The typical share of income required to make monthly mortgage payments is near a 40-year high.” Though mortgage rates have recently trended lower—averaging 6.72% in July and dipping to 6.58% last week—many would-be buyers remain sidelined. Still, Berner notes that falling rates could “spur on an August revival in buyer activity.”

Bottomline

The July slowdown in new-home sales highlights the reality of today’s market: affordability challenges are steering buyers toward existing homes, even as builders slash prices and offer record incentives. For Orange County buyers and sellers, this means opportunity—more inventory, more negotiating room, and potentially better deals as rates soften. If you’re considering a move, Whitestone Real Estate is here to help you navigate these shifts and position yourself for success. Let’s connect and turn these market changes into your advantage.

Reference: Griffith, K. (2025, August 25). New-home sales dip in July as homebuilders struggle to entice reluctant buyers. Realtor.com.