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By Giulia Carbonaro
Senior Reporter
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New home sales have plunged to their weakest year-to-date pace in nearly a decade, according to the latest Census Bureau data, as dwindling housing demand fails to unblock a growing inventory glut despite longstanding shortages in parts of the country.
Sales of new homes were up by a modest 1.6 percent in June compared to a month earlier, at a seasonally adjusted annual rate of 628,000, as buyers got a small boost in affordability due to slipping median prices. But sales were 5.6 percent below their pace in June 2025 and, through the first half of 2026, U.S. homebuilders have sold fewer new homes than in any comparable stretch since 2017, Zillow reported.
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The existing home market is not giving much more encouraging signs. According to Redfin data, U.S. pending home sales fell 1.3 percent week-over-week to their lowest level in three months during the four weeks ending July 19, as mortgage rates rose to an 11-month high of 6.55 percent.
The Numbers, Explained
Fewer new homes sold in June even as these properties became slightly more affordable than they were this time of the year in 2025. According to Census data, the median price of new homes sold was $398,300 in June, down 2.7 percent from a year earlier, while the average sales price was $475,400, down an even higher 6.5 percent year-over-year.
That suggests that even lower prices are not bringing U.S. homebuyers off the sidelines of the market. Why?
Zillow’s senior economist Orphe Divounguy believes that weak household formation is "at the root of the slowdown." Nearly half (49 percent) of U.S. adults under 30 are now living with a parent, according to a recent Federal Reserve survey, up 12 points since 2019. Another 47 percent, according to the same survey, have received help from someone outside their household to cover expenses like bills or housing costs.
Housing affordability—or the lack thereof—is pushing more young Americans to live with their parents or rent for longer than they used to in decades prior before they are able to purchase a home of their own. This delay is having a ripple effect on new household formation, as Americans are getting married, buying homes, and having children later than they used to.
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Last year, according to the National Association of Realtors (NAR), the average age of the typical U.S. first-time homebuyer reached an all-time high of 40 for the very first time, reflecting Americans’ struggles to become homeowners.
"Higher mortgage rates, softer hiring, and sticky inflation are discouraging the household formation that ultimately drives home sales," Divounguy said in a statement.
"More young adults and would-be first-time buyers are staying put, doubling up, or sharing a home rather than striking out on their own. After the burst of moves during the pandemic, mobility has slowed sharply. When fewer people form new households, fewer new homes sell," he said.
Slower household formation, and ongoing affordability issues, have the same impact on the existing home market—even though buyers are getting the best bargains they have been able to obtain in years, as sellers currently outnumber them by 48.5 percent, or nearly half a million, according to Redfin.
What Do Plunging Sales Mean for Americans?
As usual, the latest home sales data means something different for Americans depending on what role they are playing in the U.S. housing market.
For buyers, the latest data highlight just how out of reach homeownership has slipped in recent years due to rising prices, property taxes, mortgage rates, and home insurance premiums.
For sellers, dwindling existing home sales suggests that they might have to further compromise on their asking prices to lure in reluctant buyers, unless they are able and willing to take their properties off the market and wait for a better time.
For homebuilders, plunging new home sales hint that it might be best to push the brakes on new construction in the coming months to avoid further exacerbating the existing inventory glut and face the risk of plummeting profits.
"A growing glut of finished and under-construction homes is making the math on new projects harder," Divounguy said." Builders are leaning on costly incentives like mortgage-rate buydowns to move inventory, while rising input costs add more pressure. The result: more builders are sitting out, and permits, starts, and homes under construction are all sliding."
This slowdown is already happening: the latest Census data shows that privately owned housing units authorized by building permits in June were at a seasonally adjusted annual rate of 1,367,000, 3 percent below the rate reported in May and 2.3 percent below the one reported a year earlier.
As the country still faces a shortage of millions of affordable homes, homebuilders’ decision to take a step back now could mean the country might not close the existing gap any time soon.
"The building boom is fading just as the country still faces a deficit of 4.7 million homes. Construction is concentrated where land is plentiful and regulations are looser—the South and Sun Belt—not in the coastal metros where the need is greatest. Until that shifts, even a construction rebound won’t close the gap where it matters most," Divounguy said.
Contact Newsweek editors on this story: Matthew Robinson and James Debens
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