New Home Sales in January Hit the Lowest Pace Since 2022

Sales of newly built homes fell by more than expected in January, hitting their lowest level since 2022, the latest federal government figures suggest.

New single-family home sales came in at a seasonally adjusted annual rate of 587,000 in January, the U.S. Census Bureau said on Thursday. That was down 17.6 percent from the downwardly revised December 2025 reading of 712,000 and 11.3 percent below the level recorded in January 2025.

The slowdown in sales pushed inventory higher. The supply of new homes on the market rose to 9.7 months in January, meaning it would take that long to clear the existing inventory at the current sales pace. That was up from 8.0 months in December and 7.8 percent higher than the 9.0-month supply estimated a year earlier.

With supply rising and demand weakening, builders also lowered prices. The median sales price of a new home sold in January was $400,500, down 6.8 percent from a year earlier, according to the Census Bureau.

Builders have also continued to lean on incentives to attract buyers and support demand. According to the National Association of Home Builders, 64 percent of builders used sales incentives in January, marking the 12th straight month that share remained above 60 percent. Conditions in March showed little change, with the association reporting that 37 percent of builders cut prices in March, up from 36 percent in February.

Analysts at the National Association of Home Builders said the rise in inventory and weaker sales likely reflected, in part, a temporary slowdown in the new-home market, with winter weather disruptions weighing on activity. Sales posted their biggest declines in the Northeast and Midwest, where severe weather may have affected transactions.

Because the government’s new-home sales count is based on signed contracts or accepted deposits, the January figures likely captured buyers who were shopping when mortgage rates were somewhat lower than they are now. According to the Federal Reserve Bank of St. Louis, the average rate on a 30-year fixed mortgage hovered between 6.06 percent and 6.16 percent during January.

Lower mortgage rates at the start of the year offered some support to the housing market, but the ongoing war in the Middle East has added fresh uncertainty to that outlook. Over the past two weeks, mortgage rates have recorded their biggest jump in nearly a year, rising from below 6 percent at the end of February to 6.22 percent as of March 19.

Mark Hamrick, senior economic analyst at Bankrate, said mortgage rates declined in February before moving higher again as the war in Iran introduced new inflationary pressures that will “likely have a staying power.”

Still, builders can help buyers through tools such as interest-rate buydowns and payment assistance, Hamrick said, adding that the combination of slower sales, growing inventory, and falling prices could offer some relief to buyers grappling with affordability challenges.

“As sales slowed, there was more supply of new homes for sale, expanding both month over month and year over year,” he said. “Prices were moving lower, a meaningful development in the marketplace where affordability concerns have been key.”

Separate data released earlier this month by the National Association of Realtors showed pending sales of existing homes unexpectedly rose in February as buyers took advantage of lower mortgage rates and slower price growth.

Lawrence Yun, the association’s chief economist, warned that “conditions could reverse if higher oil prices lead to an uptick in mortgage rates.”