Housing affordability is a national crisis.
Between mortgage rates over 6.5%, lingering housing inflation since the Covid-19 pandemic, and rising home prices, it might be harder than ever for hopeful homebuyers to purchase property comfortably.
One of the main ways to make progress fighting this crisis is to build more homes. America needs to build 4.7 million homes just to meet current demand, according to Zillow research.
Well, homebuilders are building more homes. Which is what we need them to do.
But Americans still aren’t buying them.
Annual new home sales are down
When the U.S. Census Bureau released the June 2026 New Residential Sales report, it shared some good news: New home sales picked up in June. (This refers specifically to newly built homes, not existing properties.)
The seasonally adjusted rate of new home sales was 628,000 in June, up 1.6% from May.
But that’s pretty much where the good news ends.
New home sales may have increased in June, but that’s not a huge confidence booster considering how bad the last few months have been for new housing sales. Before June, new home sales had dropped for three consecutive months, Bloomberg reported.
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It’s also crucial to look past the month-over-month increase. June new home sales decreased by 5.6% year over year.
The actual total home sales from June 2025 were 678,000. In June 2024, the number was 686,000.
“Step back from the single month, and a pattern has emerged,” Zillow wrote in a report. “Through the first half of 2026, builders have sold fewer new homes than in any comparable stretch since 2017. The year-to-date pace is running below every year from 2018 through 2025.”
Sales on newly built homes in 2026 are worse than the last nine years or so. And this isn’t necessarily due to a lack of homes or lots for sale.
More new homes are for sale, and at lower prices
With all the talk about a housing shortage, I wouldn’t have been surprised if the number of new homes decreased in June.
That’s not what happened — but an interesting pattern has started to emerge.
“The number of new homes for sale held steady in June, but the number of unstarted homes for sale rose to its highest level of the year,” senior economist Joel Berner wrote for Realtor.com.
“Unstarted homes” refers to property that is for sale, but the builder hasn’t started building a home there yet.
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“The number of unstarted homes is now almost equal to the number of completed homes for sale, reflecting the pullback in spec building that many builders have decided upon,” wrote Berner. “With the current challenges of the market, builders do not want to be left with completed inventory they cannot sell easily.”
Of the new houses sold in June, the year-over-year median sales price decreased 2.7% to $398,300. The annual average sales price dropped 6.5% to $475,400. Overall, prices for newly built homes were down — great news for housing affordability.
But Americans aren’t buying newly built homes
The reasons people aren’t buying newly built homes … Well, they’re pretty similar to their reasons for not buying existing houses.
“Higher mortgage rates, softer hiring, and sticky inflation are discouraging the household formation that ultimately drives home sales,” wrote Orphe Divounguy, senior economist at Zillow.
It’s not clear when the new home sales pace will pick up. High mortgage rates aren’t the only problem, especially since many homebuilders offer incentives such as rate buydowns to entice buyers.
“More young adults and would-be first-time buyers are staying put, doubling up, or sharing a home rather than striking out on their own,” Divounguy wrote. “After the burst of moves during the pandemic, mobility has slowed sharply. When fewer people form new households, fewer new homes sell.”
Where do we go from here?
So if people won’t buy new houses — even at lower prices — how can we work toward fixing the home affordability problem?
If you’re a potential homebuyer who feels like you can’t afford a house, let me just say this: Consider a newly built home. Maybe the thought hasn’t even crossed your mind yet.
As mentioned above, national home prices for newly built properties are lower than those for existing ones.
This will probably remain the case as the typical American struggles to afford a home. When there isn’t much demand, homebuilders might set lower listing prices to help move homes off the market.
Many builders also offer mortgage rate buydown programs or other incentives to sell properties. In May 2026, 61% of homebuilders offered incentives, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI).
Building more homes is still the best answer available to solving the housing affordability crisis. People just need to be aware of their options.
The government, builders, and lenders can also do their part in improving sales for newly built homes.
“What fixes affordability are points that have been made before: shorter approval timelines, smaller lots and footprints,” Maor Greenberg, co-founder and CEO of Spacial, told TheStreet.
“Cutting approval timelines is not just about reducing frustration,” Greenberg continued. “It has an impact on price because the longer the house sits, the more interest it accumulates and that goes directly into price of the house.”
He also pointed out the importance of governments allowing ADUs and JADUs to be built on existing properties.
(“ADUs” are accessory dwelling units built on an existing property with a home. “JADUs” are junior accessory dwelling units built onto a standing house or garage.)
Out of 50 U.S. states, 12 have zoning laws and legislation that make it difficult to build ADUs and JADUs, according to PERCH.
The powers that be can change legislation and restrictions to make it easier to build homes. As for the individual, it’s all about knowing your options and doing what’s best for your household.
