New home sales surge to record high as labor market weakens

The sales of family homes in the United States rose to their highest level in over 3.5 years as the labor market weakens, causing mortgage rates to subside.

A modern house model, Thomas James Homes.

The new data from the United States Department of Commerce showed that new homeless surged 20.5% in a seasonally adjusted basis last month, equating quantitatively to roughly 800,000 units in August 2025. This single-month level has been the highest recorded by the Commerce Department since January 2022, and the biggest increase since August 2022.

In July, the data was revised to a higher number of 664,000 new units, up from the 652,000 units reported last month.

The rise in home purchases could be attributed to the reduced mortgage rate, in fact a new recent low of 6.26%. This new reduced mortgage rate has become an incentive for further real estate demand among prospective home buyers.

However, homebuilders also offered incentives such as rate buydowns and other sweetened deals in order to increase demand. In previous months, demand slowed as home prices surged, leaving room for less affordability and accessibility to buying homes. Homebuilders, seeing this as a concern, made substantial attempts to reduce costs and offer incentives.

However, this does not mean that the cost of purchasing a home is affordable. Larry Yun, Chief Economist at the National Association of Realtors, stated, "Home sales have been sluggish over the past few years due to elevated mortgage rates and limited inventory. However, mortgage rates are declining and more inventory is coming to the market, which should boost sales in the coming months." However, he also noted that, "Even with modest improvements in mortgage rates, housing affordability, and inventory, buyers still remain hesitant."