Page 14 - Builder Brief July 2025
P. 14

E C O N O M Y
ELEVATED RATES, CHALLENGING
AFFORDABILITY CONDITIONS PUT A DAMPER
ON NEW HOME SALES
Elevated interest rates and economic uncertainty sent
more home buyers to the sidelines in May as housing
affordability conditions remain challenging.
Sales of newly built single-family homes declined 13.7%
in May, falling back to a seasonally adjusted annual rate of
623,000, according to newly released data from the U.S.
Department of Housing and Urban Development and the
U.S. Census Bureau. This was the slowest pace since
October of last year, as mortgage rates averaged 6.83%
in May. Sales were particularly slow in the South, with the
pace of sales down 21% in May.
“Housing affordability conditions have pushed more
buyers to the sidelines, as reflected in our latest builder
survey,” said Buddy Hughes, chairman of the National
Association of Home Builders (NAHB) and a home builder
and developer from Lexington, N.C. “Despite the use of
builder sales incentives, including 37% of home builders
reporting cutting prices in the recent NAHB survey, the
housing market has slowed.”
“On a year-to-date basis, new home sales are 3.2% lower
thus far in 2025,” said NAHB Chief Economist Robert Dietz.
“As a result of slowing home sales conditions, inventory
continues to rise, marking an elevated 9.8 months’ supply
in May. Builders will be pulling back on construction in the
months ahead due to this level of inventory.”
As estimated by NAHB, total months’ supply, a combination
of current new and resale single-family inventory, now stands
at 5.2. This is the highest sales-adjusted inventory level since
2015 and Dietz noted this will place downward pressure on
housing construction starts in the months ahead.
A new home sale occurs when a sales contract is signed,
or a deposit is accepted. The home can be in any stage
of construction: not yet started, under construction or
completed. In addition to adjusting for seasonal effects,
the May reading of 623,000 units is the number of homes
that would sell if this pace continued for the next 12 months.
New single-family home inventory continued to rise with
507,000 residences marketed for sale as of May. This is
1.4% higher than the previous month, and 8.1% higher than
a year ago. At the current sales pace, the months’ supply
for new homes stands at 9.8 compared to 8.5 a year ago.
The median new home sale price in May was $426,600,
compared to $414,300 a year ago. This measure reflects
the fact that higher income borrowers face fewer budget
constraints than lower income prospective home buyers.
New home sales priced below $500,000 were down 15%
in May of 2025 compared to the May 2024.
Regionally, on a year-to-date basis, new home sales are
down 20.7% in the Northeast, 11.9% in the Midwest and
1.8% in the South. Sales are up 2.1% in the West.
While national new home sales are
Down 3.2% Year-to-Date
the Southern market is showing more resilience with
a decrease of only 1.8%, indicating a relatively stronger
demand in the region.
14 JULY 2025 | GREATER SAN ANTONIO BUILDERS ASSOCIATION







































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