New-Home Sales Surge in March as Prices Fall to a 5-Year Low

Sales of newly built homes saw a bump in February and March as prices fell to a five-year low, in a sign of resilience for the spring housing market.

Contract signings for newly built homes hit a seasonally adjusted annual pace of 635,000 in March, up 7.4% from the prior month, the U.S. Census Bureau and Department of Housing and Urban Development reported Tuesday.

That was up 7.4% from the newly reported pace of 682,000 in February, and a 3.3% gain from a year ago. February's sales pace of 682,000, also released Tuesday on a delayed basis, was 8.9% above January but down 1.1% from a year earlier.

New home prices fell sharply—March's median sales price was $387,000, 5.3% below February's $409,000, and 6.2% below what it was in March 2025. March's median sales price was the lowest since July 2021.

The uptick in sales follows January's nose-dive of new-home sales, which dropped 17.6% from December 2025 and 11.3% from a year earlier. That reading, the largest percentage decline since June 2013, surprised economists.

In the meantime, the Census said last week that construction starts on single-family homes grew significantly in March, which showed some hope for increased demand. But in a telling sign that builders remain cautious, new housing permits declined.

Builders competing aggressively on price

The rebound in sales volume from January is encouraging, Realtor.com® economist Joel Berner says. Given the high mortgage rate environment, buyers tend to be skittish. That forces more competition on the sell side. Major homebuilders have indeed reported shrinking margins as they get more generous with incentives and price cuts.

"Builders are aggressively cutting prices to move inventory, which we see in the uptick to the pace of sales and the decline in sales prices," Berner says. "Especially in March when mortgage rates rose and buyers started to feel a little more skittish, builders have been forced to offer sweeter and sweeter deals."

The trends are regional. New home sales fell 17.6% in the Northeast, down 14% in the West and down 2.6% in the Northeast. The Midwest saw home sales up 8%. New home sales are counted when a sales contract is signed, which can be at any point in their construction.

The inventory of homes for sale shrunk in March, to 481,000 homes, which is 0.4% below February 2026's 483,000 homes. And it's 4.6% below March 2025's 504,000 homes.

Builders remain sensitive to rates

Meanwhile, existing home sales dropped 3.6% in March, which was down about 1% from a year prior, according to separate data. The typical asking price in the first quarter of the year has softened, especially in the South and West. Asking prices for existing homes are still rising in the Northeast and Midwest.

National Association of Home Builders Chairman Bill Owens said the numbers show that elevated construction costs and labor shortages limit how quickly the homebuilding industry can react to the market.

The outlook for the year "remains sensitive to interest rate movements and affordability conditions," said Danushka Nanayakkara-Skillington, NAHB’s assistant vice president for forecasting and analysis. 

All of this to say, the housing market is under pressure from a variety of factors, including inflation and the conflict in Iran. So, home sales data in the coming months may reflect continued pressure, Berner said.

"Builders are generally more tuned into buyer demand than existing home sellers, so the price softness we're seeing in this segment is important to take note of," Berner said. "We'll likely see it soon in the existing segment as well."