In August, the new-home market looked similar to July as mortgage rates climbed back into the 7% range, according to Zonda’s New Home Market Update (NHMU).
New-home sales rose 1.7% compared to July but stayed 2.3% below 2025 levels. While 30% of builders lowered prices and more than 80% of communities offered incentives, consumers appear increasingly desensitized to the discounts available.
Zonda’s new-home sales metric shows there were 693,045 new homes sold in August on a seasonally adjusted annualized rate, which is a 1.7% gain from last month and a drop of 2.3% from a year ago. On a non-seasonally adjusted basis, 57,257 homes were sold, 1.9% lower than last year and 5.4% above the same month in 2019.
“The expectation was that 2026 would bring lower interest rates, but the opposite has occurred,” says Ali Wolf, chief economist for Zonda and NewHomeSource. “While consumers don’t make homebuying decisions based solely on borrowing costs, the combination of higher mortgage rates and weakening consumer confidence is delivering a one-two punch to housing demand.
“There is still reason to believe pent-up demand will return once market conditions feel more stable, but for now, the industry remains stuck in a frustrating holding pattern.”
Zonda’s New Home Pending Sales Index (PSI), which accounts for fluctuations in supply by combining both total sales volume with the average sales rate per month per community, was 132.5, representing a 3.5% decline from the same month last year. The index is currently 23.9% below cycle highs and on a month-over-month basis, seasonally adjusted new-home sales increased 3.8%.
The markets that posted the best numbers compared to last year were New York (+8.4%), Minneapolis (+5.9%), and Austin (+5.3%). New York was up compared to last year but fell 3.3% month over month, Zonda reports.
National home prices increased 2.2% year over year for high-end homes to $938,587. Prices were down 2.6% for entry-level to $316,445 and 0.8% for move-up to $512,791. Zonda says the increase among higher-priced homes reflects a concentration of new communities opening at premium price points, along with larger homesites, bigger floor plans, and more desirable locations.
Zonda points out that the modest price declines in the entry-level and move-up segments suggest builders continue to prioritize affordability through incentives, product right-sizing, and more competitive pricing in response to softer buyer demand.
The Zonda Market Rating, which accounts for both sales pace and volume, indicates an “average” market nationally compared to historical performance. Across Zonda’s top 55 major markets, 18% were “overperforming,” 33% were “average,” and 49% were “underperforming.”
National quick move-ins (QMIs) totaled 36,176, down 7.7% compared to last year and 5.2% lower month over month. Total QMIs are 53.6% above 2019 levels. Over the past 18 months, builders have taken a more measured approach to spec home construction to avoid adding excess inventory amid a more challenging sales environment, Zonda notes.
On a metro basis, 36% of Zonda’s select markets increased QMI count from the same time last year. The markets that grew the most compared to last year were San Francisco (+47.9%), Philadelphia (+34.1%), and Cincinnati (+25.5%). Compared to the same time in 2019, Cincinnati, Las Vegas, and Riverside/San Bernardino have seen the most growth in QMIs, up 279.3%, 243.7%, and 152.3%, respectively.
