New home sales surged in August to the fastest pace in more than three years, defying predictions of a slowdown and signaling fresh momentum in the housing market despite elevated mortgage rates and stubbornly high prices, The Hill reported.
Sales of new single-family homes rose 20.5% last month to a seasonally adjusted annual rate of 800,000 units, the Commerce Department reported Wednesday. That was up 15% from a year earlier and the strongest pace since January 2022. Economists surveyed by Reuters had expected just 650,000 units.
During President Joe Biden’s term, existing home sales fell sharply, from 6.12 million in 2021 to just over 4 million in 2023 and 2024, the lowest levels in nearly three decades. New home sales followed a similar trend, slipping from 771,000 in 2021 to 641,000 in 2022, before edging higher to 668,000 in 2023.
By contrast, the August 2025 rebound marks a break from years of sluggish activity, coinciding with the Federal Reserve’s rate cuts and a housing market reset under President Trump’s administration.
Two key forces fueled the surprise: modestly lower borrowing costs and aggressive discounts from builders. Freddie Mac reported that the average 30-year fixed mortgage rate decreased to 6.56% by late August, down from 6.72% in July. Rates slid further after the Federal Reserve cut interest rates last week, reaching 6.26%.
The National Association of Home Builders credited the “surprisingly large jump” to the “modest drop in mortgage rates.”
“If this momentum continues, we expect new home sales to gain traction as more buyers reenter the market in the final quarter of 2025,” said Jing Fu, NAHB senior director of forecasting and analysis.
With affordability still a hurdle, builders leaned heavily on incentives. In August, 66% reported offering discounts or mortgage rate buydowns, the highest share since the COVID-19 pandemic, according to the NAHB/Wells Fargo Housing Market Index.
“Builders remain more willing than individual sellers to adjust prices, but even with these concessions, the market is still gauging how much demand can be coaxed back,” Realtor.com Senior Economist Anthony Smith said.
Even with deals, prices climbed.
The median new home sold for $413,500 in August, up 4.7% from July and nearly 2% from a year earlier. New homes, traditionally more expensive than resales, have become more competitive as that premium narrows.
The South dominated activity with an annual rate of 530,000 sales. The Northeast saw the sharpest percentage jump, up 72% from July, though volume remained low at 31,000 units. The Midwest posted a 13% gain, while the West rose 6%.
Sales figures are preliminary and subject to revision, the NAHB noted, since a sale is counted once a contract is signed or a deposit accepted.
The National Association of Realtors will release existing home sales data on Thursday, providing a fuller picture of the housing market’s trajectory.
© 2025 Newsmax. All rights reserved.
