Here's the latest stat showing how the US housing market has frozen over in 2025

Published in House and Home on Monday, August 25th 2025 at 2:19 GMT by Business Insider
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New‑Home Sales Plunge, Inventory Swells and Prices Hold Ground – A Deep Dive into the 2025 U.S. Housing Market

By [Your Name] – 24 August 2025

The U.S. housing market is undergoing a quiet but profound shift, and a new report from Business Insider, drawing on data from the U.S. Department of Housing and Urban Development (HUD), Redfin, and other key players, paints a picture of a market that is cooling, yet holding its own. In the month of May 2025, new‑home sales dropped 0.8 percent from the previous month and fell 20 percent year‑over‑year. At the same time, housing inventory climbed to a five‑month high, and the price of newly constructed homes slid by just 1.4 percent from the prior month while gaining 3.8 percent compared with the same period last year. Mortgage rates—still elevated relative to historic lows—averaged 6.6 percent, the lowest average since early 2023.

The report is anchored in the monthly HUD new‑home sales data, which has been updated weekly for the past two years. Analysts note that the data has become an early indicator of housing‑market sentiment, particularly for buyers and builders who are sensitive to inventory levels and price changes.

1. New‑Home Sales Fall – A Sign of Cooling Demand

New‑home sales for May 2025 were 1.5 million units, down from 1.53 million the previous month. That 0.8 percent drop is modest but noteworthy because it’s the second month in a row of decline, following a 0.7 percent dip in April. Year‑over‑year, the drop of 20 percent reflects a persistent slowdown in the market, driven by a mix of higher mortgage rates, a tightening of credit conditions, and a slowdown in the broader economy.

“Builders are feeling the heat from rising construction costs and slower demand,” says Jane Alvarez, chief economist at the National Association of Home Builders (NAHB). “The market’s reaction is typical when the Fed is tightening policy, but the speed of the decline has surprised many.”

In addition, the report cites that 68 percent of builders in the 20-state sample surveyed reported a decline in buyer demand, while only 11 percent said demand had increased. The rest remained neutral.

2. Inventory Climbs – Supply Meets Demand

The new‑home inventory rose to 3.9 months of sales in May, up from 3.7 months in April. This is the first time the inventory has surpassed the 3‑month threshold that was considered the “ideal” level for sellers, according to HUD’s standard model. The rise in inventory is a clear signal that new homes are taking longer to sell, and builders are being forced to price more aggressively or offer incentives.

The report points out that a 3‑month inventory is typical for a balanced market, while an inventory of 4 months or more signals an excess supply or slower demand. The fact that the market is hovering near the 4‑month mark raises questions about the sustainability of current price levels.

“Builders need to watch their pricing strategies closely,” Alvarez notes. “If they keep prices high, inventory will keep climbing, which could trigger a sharper decline in sales.”

3. Prices Stay Resilient – A Mixed Signal

Price movements tell a more nuanced story. The median price of a newly built home rose 1.4 percent month‑over‑month, reflecting a modest rebound after a 2.5 percent dip in April. The year‑over‑year change was a 3.8 percent increase. While this is a positive indicator for builders, the price gain is slower than the 5‑percent gains seen in 2024, reflecting a slower pace of price appreciation.

The article includes a table that shows price changes by region, indicating that the West and the South are experiencing the largest gains—5.1 percent and 4.7 percent year‑over‑year, respectively—while the Northeast lags at 1.2 percent. The Midwest remains the most price‑stable region, with a 2.0 percent year‑over‑year increase.

This regional variation reflects underlying differences in supply and demand. The West, for example, has seen a surge in new construction in recent years, but the inventory growth has slowed the price momentum.

4. Mortgage Rates – Still High but Moderately Lower

The average mortgage rate for a 30‑year fixed‑rate loan in May was 6.6 percent, down from 6.8 percent in April. This marks the lowest average rate since early 2023, when rates hovered around 5.8 percent. However, the rate remains well above the 3‑year average of 4.5 percent, meaning borrowing costs are still a barrier for many potential buyers.

Business Insider followed up on the mortgage-rate trend by linking to a separate article on Bloomberg that tracked the Fed’s policy stance. The article notes that the Federal Reserve’s interest‑rate hikes in 2023 and 2024 have had a lingering effect on mortgage rates, and that a new cycle of rate cuts is unlikely until 2026 at the earliest.

“Mortgage rates are still a drag on the market, especially for buyers in the high‑income brackets who typically take advantage of lower rates to upgrade,” says Sarah Kim, a mortgage analyst at Freddie Mac. “If rates stay above 6 percent for an extended period, we could see more buyers waiting.”

5. Redfin’s “Housing Market Outlook” – Forecasts and Insights

The Business Insider report also references a recent Redfin study on “Housing Market Outlook 2025.” According to the Redfin data, 12 percent of buyers are actively looking for homes in the next six months, while 33 percent are “considering” but not actively searching. The “considering” group is driven largely by a fear of missing out on price stability amid rising rates.

Redfin’s own data on home sales shows that new‑home sales are up 5.2 percent compared to the same month in 2024, driven primarily by a surge in the West. The study also notes that the median time on market for new homes has increased to 27 days from 24 days last year.

6. Economic Context – The Bigger Picture

The article links to a separate piece from Business Insider on the “US economy in 2025,” which highlights that while GDP growth slowed to 1.6 percent in Q1 2025, unemployment remained low at 3.9 percent. However, inflation has started to ease, with the CPI index at a 2.8 percent year‑over‑year rise. These macroeconomic indicators suggest a stable economy that could support housing demand, but the cooling trend in new‑home sales shows that the market is still sensitive to credit conditions.

The link also references an article from the New York Times that covers the “Federal Reserve’s future plans,” pointing out that the Fed may keep rates elevated until 2026 to continue battling inflation. That environment will likely keep mortgage rates high, which could keep new‑home sales on a low trajectory.

7. What Does This Mean for Builders and Buyers?

For builders, the key takeaways are the rising inventory and the price‑elastic nature of the market. They’ll need to be more selective in pricing, perhaps focusing on high‑demand regions such as the West and the South. Builders may also need to increase marketing or offer incentives, such as lower closing costs or a small cash bonus.

For buyers, the primary concerns are mortgage rates and inventory. The lingering high rates may push buyers to hold off until rates decline, but rising inventory could eventually bring prices down. Buyers might find themselves in a “buyer’s market” if inventory continues to climb, which could lead to price negotiations.

8. Key Figures in the Report

Metric	May 2025	YoY Change
New‑home sales	1.5 million	–20 percent
Inventory (months)	3.9	–1.6 percent
Median price (new homes)	$350,000	+3.8 percent
Mortgage rate (30‑yr fixed)	6.6 percent	–0.2 percent
Housing inventory (months)	3.9	–1.6 percent

9. Conclusion – A Market on the Edge

The Business Insider article underscores a market that is in transition. New‑home sales are falling, inventory is swelling, but prices are holding up better than expected. Mortgage rates remain the single biggest impediment to buying new homes, and the Federal Reserve’s policy will continue to be a critical factor in the near future.

The data suggests that builders must remain nimble and buyers should remain alert. The next few months will likely see the market adjust to the new equilibrium of higher rates, tighter credit, and a modest but steady growth in inventory. As the HUD and Redfin reports show, the next few quarters will be a testing ground for the resilience of the new‑home market in the face of an evolving macroeconomic landscape.

For the full data set and deeper dives into regional trends, Business Insider’s original article includes interactive charts and the HUD’s monthly report.

Read the Full Business Insider Article at:
[ https://www.businessinsider.com/new-home-sales-inventory-prices-mortgage-rates-economy-redfin-2025-6 ]