New home sales picked up in November & December

Summary

• New home sales rose on balance at the end of 2025. Transactions surged in November (+15.5%) to a 758K annual pace. Accounting for modest giveback in December (-1.7%), the 745K unit sales pace at the close of last year was 3.8% above December 2024.
• Yet in 2025 as a whole, the annual average of new home sales ended up 1.1% below 2024. Stubbornly high mortgage rates, cooling labor market fundamentals and ongoing uncertainty all weighed on demand.
• The year-end increase in momentum was likely supported by a modest reduction in financing costs. The average 30-year fixed mortgage rate slid from 6.8% in June to 6.2% in December, reaching its lowest level since September 2024.
• Mortgage rates have continued to recede since, most recently averaging 6.0% during the week of February 19. Although this progress is encouraging, mortgage rates remain above pre-pandemic averages and are unlikely to fall much further in our view.
• Roughly two-thirds of builders reported using incentives like price cuts or mortgage rate buy-downs in November and December, a share that persisted through the first two months of 2026. Combined with builders’ poor sales expectations, the prevalence of sales incentives implies that buyer demand remains soft in many markets.
• The median sale price for a new single-family home rose slightly in December but was down 2.0% on a year-to-year basis. The annual decline reflects builder price discounts.
• New home inventory eased somewhat but remains elevated. New home inventory fell modestly over the last two months of 2025, dipping 3.5% year-over-year in December. That said, months' supply registered at 7.6 months in December, well above the 5.5-month average from 2015 to 2019.

Download the Full Report!