New home prices are dropping, but what do you get for your money? 
New Home Sales Drop 0.6 Percent
Yesterday, I noted New Home Sales Drop 0.6 Percent from Bigger Upward Revision
New home sales remain stuck in a broad range. Median and average prices decline.
Today’s spotlight is on price.
Sales Price
- The median sales price of new houses sold in July 2025 was $403,800. This is 0.8 percent (±5.9 percent) below the June 2025 price of $407,200, and is 5.9 percent (±8.5 percent) below the July 2024 price of $429,000.
- The average sales price of new houses sold in July 2025 was $487,300. This is 3.6 percent (±8.0 percent) below the June 2025 price of $505,300, and is 5.0 percent (±8.6 percent) below the July 2024 price of $513,200.
Home prices generally don’t start to fall except the period prior to recessions and in recessions.
New Homes Sold vs Sales Price
Steadily Falling Median Home Price
The median price of a new home has been falling steadily from 460,300 in November of 2022 to 403,800 in July of 2025.
That’s a decline of 12.3 percent. But that does not tell the full story.
Builders are cutting corners and offering discounts to make homes appear affordable.
Median and average home prices do not adjust for square footage, number of rooms, lot size, pools, or amenities.
New Home Median and Average Price
Since April of 2023, year-over-year home prices have been mostly negative.
New Home Sales Annualized vs Homes for Sale
The supply of new homes for sale is pressuring prices and incentives.
New Homes for Sale by Stage of Construction
One of the factors pressuring home prices is the supply of builder speculative homes.
Builders are sitting on a supply of 121,000 completed homes with another 267,000 started but unsold homes.
Blame the Fed for wild swings in housing affordability.
I discussed this in Fedthink! The Fed Is Incompetent by Design and Can’t Be Fixed
Today’s Pertinent Conclusion
We are trapped in “Fedthink”, especially the nonsensical proposition that two percent inflation is a good thing despite the fact that the Fed is clueless on how to measure inflation in the first place.
The Greenspan Fed, Bernanke Fed, Yellen Fed, and the Powell Fed all ignored housing prices as a measure of inflation.
Yellen even wanted to make up for lack of not enough inflation.
The Housing Top Is Likely In, Case-Shiller Home Prices Drop Again
On July 29, 2025, I commented The Housing Top Is Likely In, Case-Shiller Home Prices Drop Again
Prices are now down the third consecutive month. [But it does not even register on a chart.]
Demographically, the upcoming boomer die-off will add tremendous supply to the housing market. Shutting down the border will slow the rate of current demand.
Related Posts
August 22, 2025: Existing-Home Sales Rise 2 Percent to Nowhere, Expect Steep Price Declines
NAR-reported median prices will now decline for many months.
August 23, 2025: It’s Now Twice as Expensive to Buy an Entry-Level Home than Rent
Thinking of buying a starter home? Be careful!
We have a bunch of street named after white people accumulated in the last 250 years. We have a lot of black names in liberal cities mostly accumulated since Obama. We have two federal holidays vacations: MLK & Juneteenth since 2021. Non after crazy white people.
Not sure your point? The legacy of MLK is worthy of celebration as is the end of legal slavery, which is the point of Juneteenth.
teetering on the precipice of a debt deflation recession. trump is trying to force it.
get my pulitzer ready
https://www.youtube.com/watch?v=xtdriwkTlIk
This is discussed here, as well as the apparently excessive inflation affecting basic goods such as electricity and water. I didn’t know that the situation was so desperate in the United States, while we are told here in France that things are much better there than here. What proportion of the population does this affect?
It’s desperate for some and it will become desperate for everyone in about 5 years when 80+ million people have left the workforce and start collecting social security and drain the healthcare system and put pressure on everyone else to cook, clean and work for them.
Kicking out the immigrants will drive labor costs to the moon and that will metastasize around 2030 as well.
Tariffs are another tax that will raise the cost of just about everything and it is already hurting exports.
The fed lowering rates will cause another spike in inflation.
Yeah, it is desperate for some but the real pain will come and it’s gonna hurt most for those not prepared for it.
I also just read a report that many high level scientists are moving to France or other parts of Europe, the brain drain has begun.
According to this video, the biggest expenses have nothing to do with labor costs or tariffs. It’s the price of energy, for example (electricity) or water. People seem to pay at least ten times more than what I pay in France. For example, here, 1 kWh costs about €0.2. 1 cubic meter of water costs between €5 and €6.
As for the exile of American scientists, it seems to be only pseudo-science, such as gender studies, so-called “political science.” For the hard sciences, engineers, computer scientists, or engineers, the exile is still occurring in the other direction, from Europe to the United States.
Wrong. Trump administration is actively looking to kick out 55 million visa holders, any excuse is a good excuse.
https://apnews.com/article/trump-visas-deportations-068ad6cd5724e7248577f17592327ca4
The admin has also reduced H1B visas and other visas except for the golden visa which means you have to have at least $5 million to come in.
75% of the planet is water, it’s practically free so why is it costing so much money? The cost of pumping, distribution (aging infrastructure), purification and recycling all require labor. That’s why the cost is increasing.
You need to think a little bit harder.
New home sales have been dominated by big tract builders who have jacked up the sale prices in order to subsidize (buy down) the buyer’s interest rate. If they’re now doing less of that, they might be selling for a lower price without reducing their net profit because they have less cost for interest rate shenanigans. It’s tough to know what’s going on without doing a forensic audit of the builders AND their affiliated lending companies.
The general cacophony of General Bonespurs’ flood-the-zone, ADHD command-and-control on all fronts is making people too dizzy, methinks. How could anyone know where to set their feet, or bet the farm?
What they need to include what is price sq/ft and lot size. Real prices may not be really declining, just size and quality.
This administration is Peronism at its finest. Until they run out of others people money.
If Lisa Cook is a crook, Trump cannot fire her, bc she is black. The liberal media: Trump is a dictator. Trump is bully. Trump attacks liberty and freedom
In Unrelated News:
Biden held 9 cabinet meetings in 4 years.
Today, Trump is holding his 7th in six months.
Who was running the country under Biden?
Who was responsible for the con job?
Will anyone be held accountable for lying to America?
They’re saying Bolton ran a private e-mail server like Clinton did & sent family members classified information. If true, he’s being held accountable.
Leticia James lied on mortgage applications and tramped on a political rival’s constitution rights under the 8th Amendment. If true, she’s being held accountable.
Lisa Cook lied on mortgage applications. If true, she’s being held accountable.
Adam Schiff lied on mortgage applications & leaked information to hurt a political rival. If true, he’s being held accountable.
Woke generals are being held accountable.
All sorts of Deep State FBI agents are being held accountable.
Illegal aliens are being held accountable, including Abrego Garcia.
Corrupt DC leadership who may have falsified crime statistics are going to be held accountable.
Bass was held accountable by the NG for not doing her job.
Brennan & Comey are going to be held accountable.
Will Pelosi be held accountable? How about Mayorkas?
How about the Big Guy & Obama?
Hunter was being held accountable, until his dad pardoned him.
Simping for the Cheeto Pedo… you just can’t help yourself, can you?
Yes, you got me. How’d you do that?
Many hwy’s, streets and bridges in liberal cities are name after black leaders, community organizers and sport stars. Black artists on the walls. Luckily Andrew Jackson is still on.
We have a whole bunch of streets named after even white people! Crazy world.
SHHH…. we aren’t supposed to talk about black people any more. It hurts the feelings of failed white people.
Um, that sounds kinda racial. My post has nothing to do with race. I’m not sure what your point is.
Do us a favor and DON’T clarify it.
Thanks!
Looks accurate from what I have read elsewhere. Pelosi will have to throw away Gavin and all Political Involvement 100% for her forgiveness. She goes down, the entire apparatus goes with her. Lots would be left broke, so not sure she goes down in entirety like Old Joe will. They already agreed to throw him away by the looks of it…
“Biden held 9 cabinet meetings in 4 years.
Today, Trump is holding his 7th in six months.
Who was running the country under Biden?”
You and your spouse run your own household. Cities run themselves. States run themselves. Companies run themselves with the input of corporate boards and leadership. The federal bureaucracy implements the laws with funding created by Congress. There is no “who” that runs the country. I don’t know which Communist country you escaped from, but welcome to America, where we don’t want someone to “run the country”.
Oh, and cabinet meetings are just for show. To make little people think big, strong men are doing important things. In reality, the head of the DOD could care less about legislation effecting Housing and Human Services. So they’re also a huge waste of time.
new definition of “cabinet meeting”
verbally fellating dear leader in as florid language as possible
we now know how every diseased king of old ruled
Lori Chavez-DeRemer: “Mr President, I invite you see your big beautiful face on a banner in front of the Department of Labor because you are really the transformational president of the American worker, along with the American flag and President Roosevelt.”
Duffy: Mr. President, it is pretty great to celebrate labor day with a builder who loves labor, who loves the men and women who built this country, the people who sweat.. You know them very well because you worked with them. The great Trump projects
Witkoff: “There’s only one thing I wish for: that that Nobel committee finally gets its act together and realizes that you are the single finest candidate since that Nobel award was ever talked about.”
Sounds like how the news stories in North Korea have to write about the dictator. Recent south park episode had tim cook giving Trump gold and telling him his penis isnt small. But just so no one mistakes me. The Democrats are just as bad as Trump and the Republicans in burying our country in debt and repressing rates. The problems of the debt are how we end up with people like Trump in power, so ignorant Democrats basically voted him in too by voting for all their deficit spending candidates. No one paying attention to the fiscal situation should be surprised at all the craziness transpiring.
SUPER HANDSOME DEAR LEADER HAS SAVED COUNTRY AND HAS GIGANTIC UNBLEMISHED HANDS !
THANK YOU FOR YOUR SUBSERVIENCE IN THIS MATTER !
Trump’s cabinet meeting has now been going on for nearly two hours. His aides are still going around the room person by person praising him. Marco Rubio and Pete Hegseth haven’t had their turns yet.
I love that for Little Marco. I hope he vomits after every meeting.
wow, you’re up on ALL the talking points!
They are just going to print more money and boom housing prices will continue to go up as we become poorer than peasants.
At this point, the govt and private debt levels are enormous, and there are only two options. Either inflate, which is good for housing in areas with strong job markets, or a collapse, which is bad for housing.
I doubt the US can grow its way out of the debt problem. My opinion is I think the politicians will go for inflation. Hard assets, including housing, should thrive. For that reason, I agree with your comment. We will see.
Of course, that only works if the inflation shows up in people’s income.
It’s a different market. We always had vacant houses, but now we have an explosion of vacation homes ==> seven million Vrbo and Airbnb homes. Prices are slightly beyond peak. Perhaps a few owners decided to sell. The RE market might decay in real terms, without a recession. Airbnb and Vrbo dwarf new home completed for sale. Airbnb and Vrbo dam competes with home builders. If there are cracks in the dam the RE market will be flooded.
Prices should come down. Homes got completely overvalued due to the pandemic area interest rates reducing payment size. Now at “normal” rates, the buyer can’t afford the homes at these prices. This is regular market activity adjusting and will take a few years to play out. Don’t expect things to fall off cliffs, just a drift to the downside 10 to 20 percent, and all will be well.
“and all will be well”
Except for those who bought at the peak. 🙂
Some will get hurt. If they have to sell. Others will happily live in their homes for 7 to 30 years, pay off their mortgage with their super low rate, and be happy. For many, I home is not an “investment”, it’s an automatic savings account that comes with a place to cook, sleep, and play with your dog
Stupid should hurt.
A very high percentage of those completed but unsold homes are in the south (Florida & Texas being the states with the most).
In the North East there is very little new construction so prices there are going to remain a lot more sticky than those in the south.
Correct! In farm country (rural) there is some softening starting to gain traction. I expect farmland to take a modest 10% hit as exports falter and corn/soy prices continue to soften.
Corn is down 25% since the seed, herbicides and fertilizers were purchased.
Next year farmers are looking at far higher prices for fertilizers via the tariffs as 90% of our potash comes from Canada.
Elections have consequences.
Don’t worry, Trump will start taking a “stake” in farms because after all they are receiving government subsidies so “we” should all be part owners of those farms. Welcome to the United States Socialist Republic (USSR).
Supposedly Nebraska farmers and ranchers will all go bankrupt in a couple of quarters because the cheap slave labor has left.
https://www.youtube.com/watch?v=2WQa6PU-5Sk
I hate to think of what the consequences of electing Biden or Harris would have been.
Well inflation was collapsing after the explosion from the supply chain disruptions, and immigrants were getting kicked out at a faster rate than is happening today. But who can abide a black female as President! Rather we go down into debt peonage to the Chinese with rampant socialism than that happen!
I monitor the Austin, Tx market and the numbers are still out of whack despite having the steepest price cuts in the nation. A 2 bd/2 bth rents for about $2000/month but the houses sell for $500k. There is no way to make the cap rate make any sense and that’s even before we include taxes, insurance, interest and other expenses.
There are three ways to value a property:
Income generation (rent/capital cost).Land, labor and materials (capital cost).Fools – Overpaying whatever for a property.We are still stuck in #3.
On Wolfs site, Austin prices were about 210K in 2003 (earliest part on his graph). If housing was fairly valued in 2003 (ie not already in a bubble) and assuming 3% inflation over 22 years the price should now be 210*1.92 = 403K.
Current price is 540K so to get to 403K needs another 25% drop in price.
Of course Austin also experienced CRAZY growth since 2003 (the year I left) and went from a nice college town of about 700K to a traffic nightmare urban sprawl of over 2 million in those 22 years (thanks to several years on ‘best places to live’ list in the 2002-2010 time frame) so that has to factor in there someplace on prices because it was like a gold rush in the way young people swarmed Austin during those years.
I’m downtown and can concur. Prices of condos for rent have dropped to appropriate levels imo, but those for sale are withering on the vine. I look at the buildings just opened in the past 6 months at night, and you can see the multiple empty units lit up. And there’s still such huge inventory yet to come online.
Yes. Classic job rich coastal cities saw an unusually low number of new builds. Those markets are strong because work from home is over. The prices in those locations are rising, which includes cities in the Northeast, the Midwest, and Southern California.
This will hurt many home builders. I would not be an investor in debt or equity of builders that constructed in areas without good local jobs.
MISH: “Home prices generally don’t start to fall except the period prior to recessions and in recessions.”
This time is different.
As I said in an earlier post, the builders constructed the majority of new homes in pandemic locations because they thought work from home was permanent. Now, the new homes are not selling and prices are being cut because people are returning to the office in big coastal cities. Turned out work from home was only temporary.
In previous real estate cycles, new homes were constructed outside of big coastal cities where they are needed. Not this time, so the Mish statement may not be applicable.
“This time it’s different”.
Famous last words!
Many are not returning to work in the cities at all because AI is taking their jobs as companies attempt to get value out of their AI investments.
Plus we have the buyers at the low end of the spectrum being deported for lack of documentation. Some are not workers, but many are and were forming families that needed housing.
It would be nice if someone here had experience is cities where the migrants are being deported in volume and would weigh in on what is happening with their housing when they are suddenly deported.
Allegedly there have been 1.6 million deportations! Given their propensity to live in extended family situations it has to be around 200,000 housing units. That is a lot of housing at the bottom end which affects the move-up structure and sends ripples up through the market.
Those 3% mortgages are staying put which supports your position…
This time is different in that new home builders constructed a bunch of new homes in areas without a lot of jobs. They thought work from home was permanent. That was a major screwup.
Right now, the strong housing markets are LA, NYC, Boston, Chicago because of return to the office. The builders did not build many homes in those areas.
The areas the majority of new homes were constructed in have very weak housing markets because the jobs are not there.
This is different.
It is generally true that regional economies are key factors in regional housing demand. The other BIG driver of demand is a catch-all: lifestyle–a local/regional compilation of attributes emphasizing climate, quality of life, safety, school quality, etc. Much of this is a function of smaller well-run cities with attributes such as scenic landscapes, access to water, and so on
When it comes to regional economics, the ‘driver’ is the mix of industries in a given region/SMSA relative to the region’s ‘exports’ of goods and services to other regions, and internationally. Put all that together, IMHO Chicago is doomed. NYC is not far behind, but will take longer, as will Boston. LA is less clear, although the fires (and other things) last year sent a clear message.
The top-ranked MSAs are located in a variety of locations including Nebraska, Texas, South Carolina and Colorado.Markets to watch that improved the most between June and January include Orlando, Florida; St. Louis; Greeley, Colorado; Richmond, Virginia; and Southern California’s Inland Empire counties, which include Riverside and San Bernardino.The most resilient markets that improved year-over-year through January were led by Columbia, South Carolina; Kansas City, Missouri; Los Angeles; San Jose, California; and Boise City, Idaho.
Source The Hottest U.S. Housing Markets, US News, March 2025
That kind of housing just circulates among the poor. If the poor illegals are gone, it’ll be rented to poor citizens.
Then please explain the surplus new houses sitting in Phoenix, the 5th largest metro area in the US. No shortage of jobs or people moving here. The problem is affordability.
Personally, I like the Phoenix area. The problem is much of the recent housing demand came from CA residents who relocated in order to work from home in a nice affordable Phoenix suburb. Builders overbuilt because they thought the work from home trend would continue, but it stopped.
Currently, Phoenix is suffering because the work from homers are headed back to CA. Eventually, they will be gone. Phoenix will be fine because it does have local jobs. Give it some time. Once the CA workers are done leaving, it will settle down.
In the short run, Phoenix housing will have problems. In the long run, Phoenix will be fine.
@Mish,
Is there enough information on incentives to calculate conservative estimates and error bars on how much those incentives might come out to in dollar terms? Is there any way to back that out of reported sales figures and profits vs sales figures and profits from previous years? This is more of a rhetorical question than an actual one.
Question for you Mish, do you feel like tariffs on steel and other construction materials helped to make this happen or is it entirely the fault of a disgustingly overpriced home market? I personally feel like trying to round up the homebuilders probably isn’t helping.
The boomer die-off will bring many higher end properties on to the market.
Waterfront homes all across the midwest and east coast will flood the market as they retired to those choice spots. Oops, forgot to add: Florida, the gulf and the east coasts. In the west, it will be the Scottsdale and the entire coast from SanDiego to Vancouver.
A huge number of collector cars will be hitting the market as their collection are being liquidated as well. The value of these cars may hold though as the analog experience is being embraced by those that do not want AI tracking their every move in a car…
> those that do not want AI tracking their every move in a car…
Well, they better do more than drive their Red Barchettas. Throw out the watches, tablets, and pacemakers. Spray paint over the license plates. Wear a Nixon Halloween mask. Then shine green laser pointers at all surveillance cameras.
(I normally charge $250/hr for my “pro” advice. But I’ll comp you this time.). 😉
From a better vanished time?
https://upload.wikimedia.org/wikipedia/commons/thumb/d/d9/1956-07-21_San_Diego_Ferrari_166_0004M_Drake.jpg/250px-1956-07-21_San_Diego_Ferrari_166_0004M_Drake.jpg
Super true in urban areas, but there are still Blue Line Highways and many county roads with little to no surveillance. I agree that none of those pesky tracking devices can be along for what used to be Joy Rides!
I have a few investment grade oder Porsches that remain free of all listening devices and occasionally indulge in spirited drives.
Thanks for the comp! 😉
Only the ones with uncles that have country places that no one knows about.
You had me laughing before the Nixon Mask!! Nicely done!
Motorcycles are great for this reason. Far easier to avoid all the tracking and harder to view plates and can give a much bigger driving ‘thrill’ than all but a handful of super cars.
FSD motocycles are coming and talk about thrills, those bikes will reinvent the word.
Hahaha. Yes, indeed. When my FSD “disengages” because it maneuvered me into a dangerous situation, I’ll be real thrilled.
Car tracking is done by license plate so it wouldn’t help. Push comes to shove and satellites also to the job, but are expensive and time consuming to use for tracking.
True, but cameras are limited. It is not fun or safe to drive with enthusiasm in urban environments anyhow. But out in the country, a device free drive can be super fun!
Thats ok… a trillion here and there is easily borrowed for such important surveillance. Heck, we could even have checkpoints!
That’s why they invented the turn over plate… it’s in the movies anyway. (platevanish.com)…
How many of those people that “don’t want to be tracked” can 1.) Go anywhere without a cell phone, and 2.) maintain a wildly expensive, primitive car?
I can’t imagine driving an old muscle car daily on a modern freeway, with the attendant stop and go traffic.
Most people do not realize or care who or what device is tracking them.
Total thumbs up on the undesirability of driving an old muscle car on the freeway! Some of them are quite easy to maintain and have little complicated electronics to make diagnostics difficult.
The modern freeway experience is pretty dismal and tracking is everywhere!
I drive modern cars for the most part but love going out “untracked”.
They track you, get time and location, then use sunshine laws to get the camera footage.
– The boomer die-off will bring many higher end properties on to the market. > I know of and see a lot of them staying in the family. In fact a lot of these Big homes and Big lots are for exactly that purpose. They eventually subdivide (I have been seeing more of this over the past 5-8 years). The new smaller ranch(s) built next door to the BIG home next door, who the families children and their families own. They take care of the elders and so on… This is a thing in New England anyway, as I see and live it every day!!
– Waterfront homes all across the midwest and east coast will flood the market as they retired to those choice spots. > Waterfront homes seem to always find Buyers. They may not have quite the lever edge they once had, due to overbuilding so overpriced, but will sell nonetheless imo.
– A huge number of collector cars will be hitting the market as their collection are being liquidated as well. The value of these cars may hold though as the analog experience is being embraced by those that do not want AI tracking their every move in a car… > Interesting point I had not yet considered. It isn’t easy to pull all the electric surveillance apparatus out of a vehicle I don’t suspect…
Agreed on waterfront homes. Location matters in Real Estate.
As for classic cars, I’ve read that Millennials are embracing the old muscle cars. Not for driving purposes (if you drive them they lose their value) but rather for collecting /investment purposes and to go to car shows etc. I think 60s and 70s muscle cars will do just fine.
I agree with that and EV’s may ensure that scenario continues.
All valid points that we should consider in our strategies.
I see quite a bit of turnover in the mid priced waterfront homes and little at the top.
Buyers for waterfront do appear but the price rules the transaction. Many families can not agree on who gets the property and it has to be sold.
An interesting example of cars that were largely passed over by collectors is the Porsche 928. Good cars were going for $10,000 only 5 years ago. Now prices for good ones are at $100,000 and up.
Some special and low mileage ones have topped $200k!
964’s (90-94 911’s) Were $20k 10 years ago, now they are over $100k and great ones are $250-350k.
These examples are super modern in their performance and creature comfort’s, have great support communities and most of the maintenance can be done by enthusiasts.
Fun times in the collector car space for analog heads!
>>>
You and Texas are on the same wave. I love old cars, but not as an investment. Seems to be a good idea when looking at the car show success across the country!!