CHM Blog

Love a good sale? How about a new home?

The new home market is offering deals. It's just having trouble finding takers. The new home sales report for June arrived with a modest upside and a complicated story underneath it. As Realtor.com's Joel Berner reports, sales ticked up 1.6% from May to a seasonally adjusted annual rate of 628,000 — a small rebound from what was already a weak month. Year over year, though, sales are still running 5.6% below June 2025, and the first half of 2026 has been the softest stretch for new home sales since 2017.

The market is firmly in buyers' territory right now. Months of supply hit 9.4 in June, well above the roughly 6-month threshold that signals a balanced market, and builders know it. The median new home price dropped to $398,300, falling back below the $400,000 mark and coming in considerably below the existing home median of $440,600 for the same month. That gap reflects something deliberate: 62% of builders offered some form of incentive in June, according to NAHB survey data, from price cuts and rate buydowns to closing-cost credits and upgrade packages. The sales are still coming in below pace even with those tools deployed.

The regional picture is where things get particularly uneven. The West is struggling most visibly, with June sales coming in 22.4% below May and 24.6% below last June. That's not an isolated bad month — Western sales fell sharply in May as well, and the region is now running 10.1% behind 2025's year-to-date pace. The culprit is a combination of factors: inventory out West has actually recovered strongly, with 11.7% more homes for sale now than before the pandemic. That surplus has put builders in direct competition with existing home sellers over a buyer pool that is already stretched thin by affordability concerns. More supply, fewer confident buyers, and a lot of price cutting that still isn't moving the needle fast enough.

The Northeast had the strongest June on a relative basis, with sales up 3.6% month over month and 16% year over year, though the raw volume there remains much smaller than in the South or West. The Midwest is the only region actually ahead of 2025's pace on a year-to-date basis, up 2.6%. The South posted the biggest absolute volume in June at 412,000 units, up sharply from May's 375,000.

On inventory, the number of new homes for sale held roughly steady in June, but one detail inside that figure is worth noting. The count of unstarted homes for sale rose to its highest level of the year and is now nearly equal to the number of completed homes available. That's a signal that builders are pulling back on speculative construction — starting fewer homes without a buyer already in hand — because they don't want to be left holding finished inventory they can't move quickly. D.R. Horton, the country's largest homebuilder focused on entry-level buyers, cut its sales guidance for 2026 this week, underscoring just how cautious the industry has become.

For buyers willing to act in this environment, Berner sees a genuine opportunity. “Incentives are widespread, prices are being cut, and builders are motivated to close deals,” he says. “Buying new also tends to carry lower long-term maintenance costs than existing homes, which adds to the value case over time.” The challenge is that buyer confidence is low, and no amount of incentive fully offsets the weight of elevated mortgage rates and broader economic uncertainty.

The 21st Century ROAD to Housing Act, signed into law earlier this month, is designed to accelerate new construction over time through zoning reform and streamlined permitting. But as Berner notes, the annualized June pace of 628,000 sales is still well below the actual totals from both 2025 and 2024, and the permit data doesn't yet suggest acceleration is coming soon. For now, builders are managing a difficult hand — rising costs, growing competition from existing inventory, and buyers who are increasingly hard to convince.

Realtor, TBWS

How Rates Move:

Conventional and Government (FHA and VA) lenders set their rates based on the pricing of Mortgage-Backed Securities (MBS) which are traded in real time, all day in the bond market. This means rates or loan fees (mortgage pricing) moves throughout the day, being affected by a variety of economic or political events. When MBS pricing goes up, mortgage rates or pricing generally goes down. When they fall, mortgage pricing goes up. Tracking these securities real-time is critical. For more information about the rate market, contact me directly. I'm among few mortgage professionals who have access to live trading screens during market hours.

Rates Currently Trending: Neutral

Mortgage rates are getting a little support today. The MBS market worsened by -63 bps last week. This was enough to increase mortgage rates or fees. The market experienced high volatility last week.

This Week's Rate Forecast: Neutral

These three things have the greatest ability to impact rates this week: 1) Geopolitical, 2) Central Banks and 3) Inflation.

1) Geopolitical: After 13 days of military escalation between US and Iran, we start this week off with 3 days of lower activity which has helped cool off oil prices. How long will this "pause" last and will it resolve in an agreement or more military action? This will drive oil prices, gas prices and inflation globally.

2) Central Banks: We get key interest rate decisions from the Bank of England, Bank of Japan and the Federal Reserve. Wednesday's Federal Reserve Interest Rate Decision and Policy Statement will get the most focus. Currently, the long bond market is expected no rate hike, but 1 to 3 dissenting votes that do want a hike.

3) Inflation: Just one day after our big Fed meeting, we will get their preferred measure of inflation, Core PCE which is from a time period where oil and gas prices were lower than they have been recently and the readings are expected to be quite mild.

This Week's Potential Volatility: High

This morning markets are seeing a small boost on cooling geopolitcal escalation. Volatility has started at moderate to low levels but could easily become high later in the week.

Bottom Line:

If you are looking for the risks and benefits of locking your interest rate in today or floating your loan rate, contact your mortgage professional to discuss it with them.

Richard Sardella has been actively managing and providing services in the mortgage industry for over 30 years. Richard serves on the board of directors as President of Colorado Home Mortgages Inc.

All information furnished has been forwarded to you and is provided by thetbwsgroup only for informational purposes. Forecasting shall be considered as events which may be expected but not guaranteed. Neither the forwarding party and/or company nor thetbwsgroup assume any responsibility to any person who relies on information or forecasting contained in this report and disclaims all liability in respect to decisions or actions, or lack thereof based on any or all of the contents of this report.

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