The Census Bureau reported that sales of new single-family homes ran at a seasonally adjusted annual rate of 676,000 in September. That was down 0.6% from a downwardly revised 680,000 in August and 5.3% below the 714,000 pace of September 2025. It still beat the roughly 650,000 consensus, so the headline landed better than feared even though sales are slipping. The latest S&P Cotality Case-Shiller National Home Price Index, covering August, showed prices up 2.1% from a year earlier, faster than July’s 1.9%. The 20-city composite rose 2.7% and the 10 city composite 3.6%, both firmer than the month before. Taken together, the releases describe a market where sales are soft, but prices are not falling. That matters with the Federal Reserve’s late October meeting in view and housing one of the clearest places to see how high rates are affecting the economy.
The two reports cover different parts of the market, and the difference is the story. Homes for sale fell 1.0% to 476,000, leaving 8.4 months of supply at the current sales pace, while the median new home price rose 3.9% from August to $400,400 but remains 3.9% below a year earlier. The average price of $472,800 is down 6.7% from September 2025, a sign that builders are offering smaller homes and incentives to keep sales going, though Census cautions that these price figures shift with the size and location of homes sold. The monthly change in sales is well within the survey’s margin of error, and Census notes its first estimates are revised by about 6.7% on average. Resale prices show wide regional differences: Chicago led all metros for the sixth straight month at 6.7%, followed by New York at 6.2% and Cleveland at 4.3%, while Seattle fell 2.0%, Las Vegas 1.3% and Denver 0.8%. Northeast and Midwest markets, where little new housing gets built, are seeing steady gains, while Western and Sunbelt markets, where builders compete directly with resale listings, are flat to lower. Before seasonal adjustment, the national index fell 0.2% in August, but after adjustment it rose 0.3%, which S&P reads as underlying strength hidden by the usual late summer slowdown.
The broader backdrop explains why sales are lagging prices. Consumer prices rose 3.4% from a year earlier in August, so home values fell in real terms for the 15th straight month even as nominal growth picked up. S&P also points to mortgage rates in the mid to high 6% range and Brent crude near $100 a barrel as added pressure on household budgets. Builders are responding by pulling back: housing starts fell 5.2% to a 1.221 million annual rate in September, a third straight monthly decline, and completions were 14.0% below a year earlier. Less construction means residential investment is likely a drag on growth, which should show up in the third quarter GDP report.
The central tension is that weak affordability is not producing broadly lower prices. Owners who locked in low mortgage rates years ago have little reason to sell, which keeps the supply of existing homes thin and supports resale prices. Builders are absorbing the affordability problem through discounts and smaller homes, which squeezes their margins and leads them to start fewer homes. Fewer starts now mean fewer homes later, which could keep prices firm once demand recovers. For households, rising nominal prices alongside falling real values means home equity is quietly losing purchasing power, and that could weigh on how freely homeowners spend.
Several catalysts follow closely behind this data. The Fed’s October 27 and 28 meeting comes first, followed by third quarter GDP, September PCE inflation and D.R. Horton’s quarterly results. With inflation at 3.4%, the Fed has limited room to cut rates to help housing, and one month of housing data won’t change its view. D.R. Horton’s results will show how much builders are spending on incentives and whether they’re adding new projects. If inflation stays sticky and rates stay high, expect the pattern in this data to continue builders keep cutting prices and starting fewer homes, while resale prices hold up on scarcity rather than strong demand.
Disclosure
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