Sales of newly built single-family homes rose 5.1 percent on an annual basis in February as conditions improved and buyers stepped off the sidelines, according to data released Tuesday by the U.S. Census Bureau and the U.S. Department for Housing and Urban Development.
Sales of new single-family homes hit a seasonally adjusted annual rate of 676,000, which was up 1.8 percent from the revised January 2025 rate and roughly what economists had predicted.
In January, new-home sales unexpectedly dropped by 10.5 percent, well below what analysts expected, as builders grappled with a series of severe winter storms.
TAKE THE INMAN INTEL INDEX SURVEY FOR MARCH
The median sales price of new homes sold in February hovered at $414,500, and the average sales price was $487,100.
The seasonally adjusted estimate of new homes for sale at the end of February was 500,000, or a supply of about 8.9 months at the current sales rate.
In the South, where the greatest homebuilding activity has been present in the country, sales rose 6.6 percent from January to February, following a slump the previous month during wintery weather conditions. Home sales also improved in the Midwest, where new-home sales rose 20.6 percent month over month.
As high mortgage rates and prices have continued to weigh on homebuyers, builders have responded with more incentives to maintain demand.
“We see both renters and current homeowners beginning to come off the sidelines as housing conditions improve, mainly through several homebuilder incentives, such as rate buydowns,” Move Concierge CEO Gabe Abshire wrote in an email to Inman.
“Further, more households are currently looking for bargains regarding several home services. New home sales are a fresh property to easily add these amenities, such as additional home security, cheaper utilities, and faster internet speeds,” he added.
Mortgage rates have improved slightly from January, however, which should also incentivize some buyers. The 30-year fixed mortgage rate was at 6.72 percent during the week ending March 14, which was down from 7.10 percent in January, according to the Mortgage Bankers Association. The association also expects rates to drop slightly by the end of the fourth quarter of 2025, to about 6.5 percent.
