Sales of new homes in the U.S. plunged in May, falling to the lowest level since the start of the year, as high prices and rising mortgage rates pushed away buyers.
Single-family home sales fell by 7.3 percent to an annual rate of 580,000, according to Census Bureau data released Wednesday. Economists had expected an annual sales pace of 640,000, which would have been an increase from the prior month’s preliminary estimate of 622,000. The April estimate was revised up to 626,000.
The median sales price moved up to $424,900, close to where it was a year ago but two percent higher than April. The average rate on a 30-year fixed mortgage climbed from 6.23 percent at the end of April to 6.53 percent at the end of May. That was the highest since August 2025.
The low sales volumes is translating into a technical oversupply of homes on the market. In May, the supply of new homes for sale declined by 1.4 percent from a year ago. But that represents 10.3 months of supply at the current sales rate, matching the highest level of supply since 2009. Four to six months is considered a normal supply.
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