Cooling Prices, Leaner Inventory Shape 2025 Housing Market

New home sales closed out 2025 on a mixed yet resilient note, pointing to steady underlying demand even as affordability pressures and limited supply continued to weigh on the market. Although sales dipped 1.7% from November to December, activity in December 2025 remained stronger than a year earlier.

Data from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau show that sales of newly built single-family homes finished the year at a seasonally adjusted annual rate of 745,000 units — a 3.8% increase compared with December 2024. For the full year, an estimated 679,000 new homes were sold in 2025, a modest 1.1% decline from the 2024 total.

Survey data from NAHB indicate that 67% of builders used sales incentives in December, the highest share recorded in the post-pandemic period. On average, builders reduced home prices by 5% during the month, underscoring ongoing efforts to attract cost-conscious buyers.

Inventory on the Decline

Inventory of new single-family homes totaled 472,000 units in December, down 2.7% from November and 3.5% below December 2024 levels. At the current sales pace, this represents a 7.6-month supply, an improvement from the 8.2-month supply recorded one year earlier. (A six-month supply is typically viewed as a balanced market.)

At the same time, existing-home inventory has slipped after showing gradual improvement in prior months. Some moderation in home prices across both new and existing segments has helped sustain buyer demand despite persistent affordability challenges.

Taken together, new and existing home inventory has edged lower in recent months, falling to an overall four-month supply of total housing. This tightening largely reflects slower construction activity.

Buyers See Price Improvements

Home prices continued to show signs of softening in 2025. The median new home sales price declined 1.3% to $415,000, compared with $420,300 in 2024.

In 2025, new home sales were distributed across price tiers as follows:

• 20% were priced below $300,000
• 46% were priced between $300,000 and $500,000
• 34% were priced above $500,000

For additional insight into inventory trends and regional sales activity, see this Eye on Housing article from NAHB Assistant Vice President for Forecasting and Analysis Danushka Nanayakkara-Skillington.