New home sales in the US declined slightly in September due to a sharp rise in mortgage interest rates. Home builders continue to cut prices and provide discounts on home purchases, but it is still difficult to fully offset the impact of rising financing costs on housing demand, highlighting the ongoing pressure on the US real estate market. The Zhitong Finance App learned that according to data released by the US government on Tuesday, sales of newly built single-family homes fell 0.6% month-on-month in September. The annual sales volume after seasonal adjustments was 676,000 units, which is still higher than the 651,000 units expected by economists surveyed by the media.
Meanwhile, the price of new homes continues to be under pressure. The median sales price of new homes fell 3.9% year on year to US$404,000 in September. This is also the seventh month out of the first nine months of 2026 to see a year-on-year decline in new housing prices, reflecting that builders are attracting buyers through price cuts.
New home sales data for September highlights the serious challenges facing the US real estate market. According to the data, US mortgage interest rates rose by about 0.5 percentage points in September and hit the highest level in nearly three years in early October. Although interest rates have declined slightly since then, overall borrowing costs are still at a high level, continuing to reduce the purchasing power of potential buyers.
Soaring mortgage interest rates have not only dampened demand for housing, but also dampened homebuilders' confidence. According to previously released data, the US homebuilder confidence index has fallen to its lowest level in 14 years.
Nationwide economist Daniel Vielhaber said builders must now work harder to attract buyers, and high mortgage interest rates may continue to put pressure on home sales until at least the end of this year.
Vielhaber pointed out in the report that although price cuts and preferential mortgage interest rates help maintain housing sales, the current market relies more on concessions from builders rather than strong actual demand for home purchases.
Against the backdrop of weak demand, builders are still slow to digest new home inventories. According to data released on Tuesday, the inventory of new homes for sale fell 2.3% year on year to 476,000 units in September. At the current rate of sales, this is equivalent to 8.4 months of supply.
This inventory digestion cycle has fallen to its lowest level since this year, but it is still significantly higher than pre-COVID-19 levels, indicating that the US new home market is still facing greater supply pressure.
Judging from regional performance, the largest new home sales market in the US, sales in the southern region fell 6.6% in September, and annualized sales fell to 413,000 units. New home sales also declined in the Midwest, offsetting the boost brought about by sales growth in the western and northeastern regions.
Notably, first-time homebuyers and entry-level homebuyers are particularly sensitive to changes in financing costs, so homebuilders targeting this group face greater challenges.
Bloomberg industry research analyst Drew Reading pointed out in a report released last week that builders that mainly serve entry-level homebuyers, such as Houghton Homes (DHI.US) and Mertage Homes (MTH.US), are more vulnerable to rising mortgage interest rates.
In order to address the declining affordability of housing, builders are taking various measures to maintain sales, including introducing smaller homes with a lower total price, and reducing the monthly payment burden on buyers by subsidizing mortgage interest rates.
However, although these preferential measures can stimulate transactions to a certain extent, they also reflect the lack of strong enough endogenous demand in the housing market. Analysts pointed out that compared to existing home sales data, new home sales are generally regarded as a more timely indicator reflecting changes in the real estate market, because new home sales are generally included in statistics when a sales contract is signed, while existing home sales are usually only recorded after the transaction is completed.
However, due to large monthly fluctuations in new home sales data, monthly changes still need to be interpreted carefully. The US government pointed out that the actual change in new home sales in September may be between a 14.4% decline and a 13.2% increase. Therefore, although the published data showed a 0.6% month-on-month decline, it is still difficult to determine whether new home sales actually declined.