Ignoring the Covid rebound, new home sales have gone nowhere for a decade.
New Residential Construction Report
The New Residential Construction Report for September 2026 remains a meandering to nowhere broken record.
New Home Sales
- New Home Sales Sales of new single-family houses in September 2026 were at a seasonally-adjusted annual rate of 676,000.
- This is 0.6 percent (±13.8 percent) below the August 2026 rate of 680,000, and is 5.3 percent (±12.5 percent) below the September 2025 rate of 714,000.
For Sale Inventory and Months’ Supply
- The seasonally-adjusted estimate of new houses for sale at the end of September 2026 was 476,000. This is 1.0 percent (±0.9 percent) below the August 2026 estimate of 481,000, and is 2.3 percent (±4.0 percent) below the September 2025 estimate of 487,000.
- This represents a supply of 8.4 months at the current sales rate. The months’ supply is 1.2 percent (±14.7 percent) below the August 2026 estimate of 8.5 months, and is 2.4 percent (±14.1 percent) above the September 2025 estimate of 8.2 months.
Sales Price
- The median sales price of new houses sold in September 2026 was $400,400. This is 3.9 percent (±6.2 percent) above the August 2026 price of $385,400, and is 3.9 percent (±8.9 percent)* below the September 2025 price of $416,800.
- The average sales price of new houses sold in September 2026 was $472,800. This is 0.4 percent (±6.1 percent) above the August 2026 price of $470,800, and is 6.7 percent (±6.6 percent) below the September 2025 price of $506,800.
Note the huge margins of error on these stats ±13.8 percentage points on monthly sales.
The Census Department does not have a lot of faith in these monthly numbers and neither do I.
However, the trends are easy to spot and that’s what matters more than any single report.
New Home Sales Annualized vs Homes for Sale Detail
Supply of new homes for sale has generally been rising. Actual sales have generally been falling.
Both measures appear to have stabilized but the number of new homes for sale is historically elevated.
New Homes For Sale by Stage of Construction
Stage of Construction Details
- For Sale: 476,000
- Not Started: 115,000
- Under Construction: 250,000
- Completed: 111,000
- Under Construction Plus Completed: 361,000
Builder Reluctance
A new trend is underway since February-March 2025.
The number of homes under construction has fallen from 292,000 to 250,000 while the number of vacant but buildable lots has risen to 115,000.
Meanwhile, builders are scrambling to sell completed homes, down from 128,000 to 111,000.
Few want to take risks in this nasty housing environment with labor shortages due to deportations, rising materials costs due to tariff policies and the war, and rising interest rates.
Counting Vacant Lots
Counting vacant lots as a home for sale strikes me as silly. But the Census Department includes not started homes in its measures of supply.
The important numbers are completed and started plus completed. Those homes represent builder commitments and carrying costs.
To sell these homes, builders are under pressure to lower prices, offer financing, or other incentives. And they are not starting new ones.
New Homes for Sale Supply in Months
Supply in Months Detail
- All Supply: 8.4 Months
- Under Construction or Finished: 6.4 percent
- Finished: 2.0 percent
All of these numbers are historically elevated but builders have been scrambling to dump their inventory of completed homes.
New Home Sales vs Existing Home Sales
One Word – Stagnant
Monthly reports are noise.
New and existing homes have both been stagnant since January 2023.
This is despite significant interest rate moves in both directions.
30-Year Mortgage Rates
Rates courtesy of Mortgage News Daily.
The average MND rate is 7.33 percent the same as a month ago but down from 7.61 percent on October 5.
That’s last month’s chart. Nothing significant has changed.
Pool of Price Insensitive Buyers
Taken together, the preceding two charts tell a story of price insensitive buyers.
This pool includes all cash buyers, those with huge stock market gains who are unconstrained by affordability measures, those with significant home equity who want to trade down, and speculators who believe the stock market or the Fed will bail them out.
Everyone else has been priced out of the market by a price-mortgage rate combination that is just too high.
Few existing-home owners want to trade a 3 percent mortgage rate for one again well above 7 percent.
Related Posts
October 2, 2026: Mortgage Rates Have Largest Weekly Gain in Four Years
Since February, mortgage rates have surged from 6.00 percent to 7.54 percent.
30-year rate now back to 7.33 percent.
October 13, 2026: Existing-Home Sales Meander Nowhere for Nearly Four Years
Since December 2022 sales have gone nowhere.
October 20, 2026: US Housing Starts Drop Another 5.2 Percent, Weakness Persists
The housing trends remain flat to down: starts, permits, completions, and sales.
Three-word synopsis: Housing is broken.
The price of home sales has always been reflective of the same thing. Prices people are willing and able to pay.
Unlike other situations where price can fluctuate, and you can play with the numbers to make it work, housing relies on Affordability. Nothing fancy, but just the sheer numbers and how they work out.
Price is based on cost to build plus all extras provided. Unless it’s going to be simply a shell, then it can sell for cheap to contractors, and other places/people where people can finish it off themselves. Not a high percentage.
Next up is a drop in Price, but as tangled as that can get, it may become the only option, and that’s called a loss. Banks and Builders don’t like or prefer that scenario for obvious reasons.
If that doesn’t or can’t work, then foreclosures come, and builders default, and housing becomes a nightmare scenario for all. This is clearly where it is heading, and I don’t see anything that can stop it. Not enough People can afford the current cost, but the cost is already baked into the sale price. A big loss by several parties when that eventually occurs. We shall see soon enough, because it’s coming one way or another…
“Supply of new homes for sale has generally been rising. Actual sales have generally been falling.”
Here in the Orlando metro area, new construction of single-family homes is booming. Something has to give. I hear that builders are offering upgraded amenities, mortgage buy-downs etc. I don’t know where all the people are coming from to purchase these new homes. There are many major developments from 1K to 2K homes each going up in outlying areas…former cow pastures and citrus groves. A local website has people continuing asking for employment. Wages aren’t the greatest in this area.
Builders build, like skiers ski, and hikers hike etc.
House prices were included in the CPI-U until January 1983. Supposedly that made the time series too volatile. Funny thing real prices are indeed volatile. Why mask it?
The house prices were not “volatile” back then, especially “real prices”. What was volatile was the CPI calculation for ‘housing costs‘ which was imputed using housing prices coupled with mortgage interest costs.
So when mortgage rates followed other interest rates suddenly upwards (in the late 70s and early 80s), calculated housing costs also went up with volatility which was not accurate for the majority of homeowners living in their previously purchased homes with their existing mortgage rates. Their housing costs weren’t actually increasing by that calculation.
Thus the change in the CPI calculation to an investment, rather than current consumption.
In the first place, any given individual is in all probability not average. The concern is not with how the value of money can be measured if at all, but rather the relationship of money to the level and movement of prices.
Michael Woodford, who won the Nobel, thinks monetary policy operates primarily through interest rates, rather than through simple control of the monetary aggregates. His book Interest and Prices became a foundation of New Keynesian economics.
September’s money stock #s weren’t unusual, but the ratio of transaction’s deposits to savings / investment type of accounts is still increasing.
Link the late: Dr. Daniel L. Thornton, Vice President and Economic Adviser: Research Division, Federal Reserve Bank of St. Louis, Working Paper Series:
“Monetary Policy: Why Money Matters and Interest Rates Don’t”
Thornton: “the interest rate is the price of credit, not the price of money”
“Today “monetary policy” should be more aptly named “interest rate policy” because policymakers pay virtually no attention to money.”
I received a phone call from a Trump supporter telling me that Trump had made housing more affordable. Not sure she liked me refuting her with the facts.
Poor thing had no answers beyond her shabby little script. I was as gentle as possible with my refutation.
These MAGA people will believe anything Fox tells them!
Your permanent record now carries the mark of the beast.
Best just to smile and wave.
Crossed that rubicon some time ago right here posting on Mish’s site.
Some homeowners with 3% mortgages from 4-5 years ago could not buy their own existing home at a 7% rate and higher property tax.
Only some?
But they don’t need to because they already own the house with a 3% mortgage. So what’s your point? (and BTW this article is about new houses, not pre-existing homes and sales)
Those same homeowners bought or refinanced at a low rate and now have plenty of money (compared to historical mortgage rates) to spend as they please and to spread that new ‘income’ out to any businesses they frequent
A general rule is for every 1% increase in the 30 year mortgage rate, there should be a 10% decrease in price (without accounting for increase in household income).
At a rate now of around 7%, home prices need to drop at least 25% from their all time highs set around early 2022.