Americans face dilemma after housing market news
During the 2026 home-buying season, I've noticed two ongoing narratives so far. First, mortgage rates continue to hover around 6.5%. Second, home prices are mostly flat. The U.S. Census Bureau and the U.S. Department of Housing and Urban Development just broke down that second story for us a little ...
Americans face dilemma after housing market news
Overview
During the 2026 home-buying season, I've noticed two ongoing narratives so far. First, mortgage rates continue to hover around 6.5%. Second, home prices are mostly flat.
The U.S. Census Bureau and the U.S. Department of Housing and Urban Development just broke down that second story for us a little more.
Together, the government entities released the May 2026 Monthly New Residential Sales report on June 24. And, no surprise — prices on newly built homes were almost unchanged from the same month last year.
As of May, the median new home sale price was $424,900.
This may seem like an uneventful, even predictable, report on home sales. However, there is much more to the story.
Home sale prices aren't as calm as they seem
The annual new median home sale price may have been flat at $424,900. But the yearly average new home sale price increased by 5% to $540,600.
This difference matters.
"When the average rises, but the median doesn't, that's not the same house getting more expensive — it's a change in which houses are being sold," Maor Greenberg, co-founder and CEO of Spacial, explained in a statement.
Related: More on Home Affordability
Greenberg believes that the shift in available low-price housing is the true story behind the numbers of the New Residential Sales report.
"The cheaper houses stopped showing up in the data," he said. "A year ago, one in five new homes sold for under $300,000. Now, it's one in seven. The affordable new home is getting harder to build and harder to find, and that's the real story. Homes under $300,000 accounted for 19% of sales a year ago and 15% now."
Details
It may seem odd that new homes becoming more expensive, especially if so many potential homebuyers are waiting on the sidelines until mortgage rates decrease. Wouldn't lower demand result in lower prices?
“Builders can't make money on entry-level homes at today's costs, so they build pricier ones," Greenberg said. "A firm price protects its profit margins, but it's a narrowing business that’s surviving by serving fewer, wealthier buyers and walking away from building entry-level homes."
So, lower-income or first-time homebuyers are being priced out of new-construction homes.
Inventory and supply problems keep homes expensive
The seasonally adjusted numbers of new homes for sale was 496,000 at the end of May, according to the Census data. This is 1.4% lower than the May 2025 estimate of 503,000.
A June Zillow report revealed that the U.S. needs to build 4.7 million new homes to address the current housing shortage — and that's not counting the additional homes we need to build to keep up with future demand.
As I recently wrote about for TheStreet, low inventory is the main reason behind America's housing affordability crisis. When supply (housing) can't keep up with demand (people wanting to buy a house), there's more competition. Then home prices stay high or even increase.
More on the Housing Market:
- Experts update mortgage rate, housing market predictions
- Bank of America reveals surprising housing market shift
- Zillow releases crucial new housing market prediction
Why don't we just build more houses, then? Well, easier said than done.
"Higher inventory normally means oversupply, but look at what's inside the 496,000. Only 118,000 are finished homes," Greenberg said. "The rest are not started or are under construction. This isn't a flood of empty move-in-ready houses; it's a backlog of homes that builders have already committed to, stacking up against a slower buyer pool."
Fewer people want to buy homes, we need more housing to help the affordability crisis, and homebuilders are already overcommited. Inventory is too low, but new-construction home prices are too high.
It's a vicious cycle.
Source
Originally published at www.thestreet.com.
