by Both segments show growth, although pricing appears more competitive in new construction as builders offer incentives to move product
WASHINGTON — The latest figures in year-over-year new and existing home sales could be good news for the industry, particularly in driving consumer demand for furniture.
Granted, because of the government shutdown this past fall, new home sales figures are behind the existing home sales figures by about two months, reflecting October versus December data respectively.
Still, the figures — notably an 18.7% increase from October 2024 — point to a strength in the new housing market that is cause for celebration.
With a year-over-year increase of 1.4% in December, existing home sales were less to brag about, although the 5.1% increase from November is also worth mentioning as it exceeded the new home sales decline of .1% from September versus October.
“2025 was another tough year for homebuyers, marked by record-high home prices and historically low home sales,” said Lawrence Yun, chief economist for the National Association of Realtors. “However, in the fourth quarter, conditions began improving, with lower mortgage rates and slower home price growth. December home sales, after adjusting for seasonal factors, were the strongest in nearly three years. The gains were broad-based, with all four major regions improving from the prior month.”
This begs the question of what is driving sales in each segment and what might be holding them back.
Clearly there is plenty of inventory of new and existing homes, giving buyers a number of options in terms of size and cost.
According to the U.S. Department of Commerce, there were 488,000 newly built homes available in October, representing a 7.9-month supply based on the current sales rate. This is down from 9.3 months in October 2024 and about level with September.
By comparison, there were 1.18 million existing homes for sale in December — up 3.5% from 1.14 million in December 2024 and down 18.4% from November. This represented a 3.3-month supply of unsold inventory based on the current rate of sale, up from 3.2 months in December 2024 and down from 4.2 months in November.
Another key difference lies in what buyers are paying or being asked to pay for these homes. According to the National Association of Realtors, the median existing home price continued to rise, albeit at a smaller pace of .4% to $405,400, compared with $403,700 in December 2024. This was the 30th consecutive month of year-over-year price increases, undoubtedly spurring real estate tax revaluations and resulting higher tax rates around the U.S.
By comparison, the price of new homes was $392,300, 8% below the October 2024 price of $426,300 and 3.3% below the median price of $405,800, in September. Clearly builders have been reducing costs or providing incentives in order to spur sales, which appears to have been working based on the double-digit growth in sales since fall of 2024.
And while compelling values can be found in both segments, buyers often prefer to purchase new as it allows opportunities to pick out their own flooring, cabinets and other amenities. That gives a reasonable amount of competition for the existing home market now and in the year ahead.
The question is, will prices of existing homes begin to come down from their current heights? Much will depend on inventory levels and the types of incentives that builders continue to offer to make new construction more affordable and thus even more competitive.
Housing affordability remains a key issue now and in the year ahead, particularly as homeowners grapple with other increased housing costs ranging from homeowners insurance to local real estate taxes, both of which require significant contributions to an escrow fund. Thus, as the market for homebuying continues to play out, buyers will typically choose what’s in their overall budget, which we can only guess will include new furniture.
Growth in both segments, which will be further aided by reductions in interest rates, should give the industry some cautious optimism now and in the year ahead.
