Look, the new home market is sending some mixed signals right now, and I want to walk you through what's happening. According to HousingWire and the latest Census data, June new home sales came in at an annual pace of about 628,000 units. While that's a small uptick from May, it's actually down compared to the same month last year, which tells you demand just isn't where builders were hoping it would be heading into summer.
Here's where it gets interesting on the pricing side. The median price for a new home in June dropped to $398,300, which is the lowest we've seen since the summer of last year. Builders are clearly feeling the squeeze in an affordability-constrained market with mortgage rates staying elevated, so they're using more discounts and incentives to move inventory. What's really notable is that builders have shifted their strategy and are constructing smaller homes. The typical new single-family home is running around 2,176 square feet these days, down significantly from the over 2,600 square feet homes were running a decade ago.
The breakdown of what's selling is telling too. More than half of all new home sales in June were priced below $400,000, and nearly a quarter were below $300,000. That's a meaningful shift from a year ago when only 47 percent were below $400,000 and 16 percent were below $300,000. Builders are definitely meeting people where they can actually afford to buy, though I'll note that hitting those sub-$300,000 price points really only works in markets with lower construction and regulatory costs.
On inventory, we're looking at about 9.3 months of supply on the market, which is still elevated compared to the more balanced six-month level. The good news is inventory actually came down slightly from May, but we're still carrying more inventory than we had a year ago. The real issue is that we've got way too many completed homes sitting around and an all-time high number of homes that haven't even been started yet.
The spring selling season that everyone was watching turned out to be pretty choppy. Builder confidence was cautiously optimistic coming in, but geopolitical uncertainty and rising mortgage rates knocked consumer sentiment down considerably through the spring. Some months were stronger than others, and when you look at the year-to-date numbers, home sales are tracking weaker than any similar period since 2017. A big part of this slowdown is that younger adults and first-time buyers aren't forming new households at the pace they used to, which naturally means fewer new homes are being sold.
What I am seeing locally here in the Bay Area and East Bay is that this national trend of cautious demand and inventory challenges is definitely reverberating through our market. Our region isn't seeing the volume that the South is capturing, and I'm expecting builders and sellers alike to continue relying on incentives and strategic pricing as we move forward. For buyers, this could be a window where you have more negotiating power than you might think.
