New home sales shocked, but are these numbers legit?

Today’s report on new home sales printed one of the most surprising results I’ve seen in a while, showcasing significant growth. Now, we should have expected some growth in new home sales, given that mortgage rates have declined recently. In fact, each time mortgage rates have approached 6% since late 2022, new home sales have seen an uptick. This was a topic I discussed on CNBC on Wednesday. But we got the highest levels of sales since 2022, so let’s take a look at the report and see if those numbers are legit.

From Census: New Home Sales Sales of new single-family houses in August 2025 were at a seasonally-adjusted annual rate of 800,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 20.5 percent (±21.8 percent)* above the July 2025 rate of 664,000, and is 15.4 percent (±25.1 percent)* above the August 2024 rate of 693,000.

This was a significant beat of estimates, but if you have been following the purchase application data for new home sales provided by the Mortgage Bankers Association each month — data that I believe many people are still unaware of — it shouldn’t have come as a surprise that new home sales increased. 

As a general rule, whenever there is an extreme deviation in sales for new homes — whether positive or negative — there is a good chance it will be revised later on. This is simply how Census revisions work. Given that interest rates have been below 6.64% for eight weeks now, we should have anticipated some growth.

For Sale Inventory and Months’ Supply The seasonally-adjusted estimate of new houses for sale at the end of August 2025 was 490,000. This is 1.4 percent (±1.3 percent) below the July 2025 estimate of 497,000, and is 4.0 percent (±5.2 percent)* above the August 2024 estimate of 471,000. This represents a supply of 7.4 months at the current sales rate. The months’ supply is 17.8 percent (±16.2 percent) below the July 2025 estimate of 9.0 months, and is 9.8 percent (±17.2 percent)* below the August 2024 estimate of 8.2 months.

The builders have seen a significant drop in the monthly supply from recent highs this year, which some would say is beneficial, as it now allows them to build more homes. However, the builders still have a substantial number of completed units for sale and homes that they haven’t started construction on yet, so I wouldn’t be cheering the monthly supply drop story yet. Completed units for sale are still over 120,000 — a number that for decades has been a red flag for the builders and usually means permits are declining

The charts below provide a snapshot of several key data points from the new home sales report released today.  

Conclusion

I don’t anticipate any surprises in the existing home sales report, which will be released on Thursday. However, today’s new home sales figures were so impressive that many people are skeptical about them, despite showing some signs of growth.

Speaking of growth, the weekly purchase application data for existing homes was also released today, marking the best eight-week streak of the year since mortgage rates dropped from 6.64% to around 6%. Today’s report showed 0.3% week to week growth and 18% year over year but it’s been the best 8 week weekly streak for 2025.

For the new home sales report, expect revisions to bring down the numbers, but don’t discount the fact that the housing data has improved since rates moved lower the last eight weeks.