US new home sales declined 7.3% in May 2026 to a seasonally adjusted annualized rate of 580,000 units, down from the previous month and marking a 6.8% drop compared to May 2025 [1, 2, 3, 4, 5]. The median sales price of a new home remained steady at about $424,900 year-over-year, while the average sales price rose 7.8% month-over-month to $540,600 [1, 3, 4, 5].
Mortgage rates continued to rise, with the 30-year fixed rate averaging between 6.47% and 6.6% in May amid persistent inflation and geopolitical tensions, exerting pressure on buyer demand [1, 3, 5]. The supply of new homes increased slightly to approximately 496,000 units at the end of May, up 2.3% from April but still down 1.4% from a year earlier [4]. At the current sales pace, the inventory represented about 10.3 months of supply, rising from 9.3 months in April [4].
Higher mortgage rates and elevated home prices likely continued to reduce buyer activity in the new home market, according to analysts [1, 3, 5]. Some homebuilders tried to offset these challenges through price cuts and buyer incentives, but those efforts failed to fully counterbalance the effect of high borrowing costs [5].
The decline in new home sales in May marks the third consecutive month of monthly drops, reflecting ongoing sensitivity to mortgage rate fluctuations. Further data on new home sales and pricing will be released in the coming months to track the market's response to changing economic conditions.
