New Home Sales Sink In May, Supply Hits Three-Year High As Trump Tariffs Strain Market
As the US housing downturn was exacerbated by rising prices, expanding inventory, and the effects of President Donald Trump’s tariffs, new house sales fell in May while housing supply soared to a three-year high.
President Donald Trump and a sold house.
On June 25, 2025, President Donald Trump and Prime Minister Keir Starmer of the United Kingdom attended a NATO summit in The Hague, Netherlands.
On Wednesday, June 25, the US Census Bureau and Department of Housing and Urban Development reported that sales of new single-family houses in May had dropped to a seasonally adjusted annual rate of 623,000. That is a decrease of 6.3% from May 2024 and 13.7% from April.
Additionally, the sum was significantly less than what Wall Street had anticipated. According to CNBC, the Dow Jones had predicted 695,000 sales in May. The actual number was significantly lower than the pre-pandemic 2019 average of 685,000 units sold, in addition to being below the six-month average of 671,000.
“The large fall in new home sales in May cancels out all of the positivity of the past couple of months and serves as a valuable reminder that buyer activity can only rise so far with mortgage rates hugging 7%,” said Bradley Saunders of Capital Economics.
Meanwhile, the number of new homes on the market increased to 507,000, up 8.1% from May 2024 and 1.4% from April. Since the summer of 2022, when the Federal Reserve initially started hiking interest rates to combat inflation brought on by the COVID-19 epidemic, that is the highest level of supply.
Prior to then, the market hadn’t seen this much inventory of new homes since the global financial crisis and housing slump in 2009. It would take 9.8 months, up from 8.3 months in April, to sell through all of the inventory at the current sales pace.
Builders claim that because of high mortgage rates and rising building costs brought on by Trump’s tariffs, potential homebuyers are avoiding the real estate market.
“Most markets are seeing weaker price growth, and a growing number of markets are seeing price declines for resales due to rising inventory levels and potential home buyers who are waiting for affordability conditions to improve,” stated Robert Dietz, chief economist for the National Association of Home Builders. “Given current market conditions, NAHB is forecasting a decline in single-family starts for 2025.”
Key building materials are now more expensive as a result of Trump’s decision to increase tariffs on imported steel and aluminum to 50%. Developers have been compelled to either delay projects or boost prices as a result of the increase.
More builders are providing discounts as the market becomes more lenient. The largest percentage since NAHB started monthly tracking in 2022 was 37% of builders who reported lowering prices in June.
In May, the median price of a new home increased to $426,600, up 3.0% from May 2024 and 3.7% from April.
