Political Calculations' initial estimate of the total market capitalization of new homes sold in the United States ticked up May 2025. The first estimate of the time-shifted trailing twelve month average of the total value of new homes sold during the month is $28.86 billion.
This figure represents an increase of 2.1% from our revised estimate of $28.26 billion in new homes sales in April 2025. The April 2025 data was revised upward from the initial estimate of $28.22 billion we presented last month.
The following charts present the U.S. new home market capitalization, the number of new home sales, and their sale prices as measured by their time-shifted, trailing twelve month averages from January 1976 through May 2025. The data for May 2025 indicates the new home market gained from higher sale prices and not a higher number of sales, which is not a good sign for homebuilders.
Falling new home sales trend:
Rising trend for home prices:
Reuters describes how the relative unaffordability of new homes is contributing to homebuilder woes:
Sales of new U.S. single-family homes fell by the most in nearly three years in May as high mortgage rates and rising economic uncertainty sapped demand, lifting the supply of unsold houses on the market to the highest level since late 2007.
The larger-than-expected decline in sales reported by the Commerce Department on Wednesday added to weak homebuilding and tepid sales of previously owned homes last month in suggesting that housing would subtract from gross domestic product in the second quarter after being neutral in the January-March quarter.
Mortgage rates have risen since bottoming in March 2025, contributing to the headwinds of affordability for new home buyers although they remain below the 7% threshold. We'll take a separate look at the relative affordability of new homes nationally within the next two weeks.
References
U.S. Census Bureau. New Residential Sales Historical Data. Houses Sold. [Excel Spreadsheet]. Accessed 23 May 2025.
U.S. Census Bureau. New Residential Sales Historical Data. Median and Average Sale Price of Houses Sold. [Excel Spreadsheet]. Accessed 23 May 2025.
Image credit: New Home Construction, Georgia USA by Paul Brennan on PublicDomainPictures.net. Creative Commons Creative Commons - CC0 Public Domain.