New Home Sales Slipped 0.6% to 676,000 Rate in September
By TopHolding Editorial · Monday, October 26, 2026 at 8:00 PM
New home sales fell 0.6% in September to an annualized rate of 676,000. Economists at First Trust Portfolios attribute the subdued pace to rising mortgage rates and ongoing affordability headwinds.
According to Bryce Gill, Economist, Brian S. Wesbury, Chief Economist, and Robert Stein, CFA, Dep. Chief Economist at First Trust Portfolios, new home sales remained in low gear in September as affordability headwinds kept buyers sidelined. Purchases of newly built single-family homes slipped 0.6% during the month to a seasonally adjusted annual rate of 676,000, topping the consensus expectation of 651,000 but falling 5.3% below the pace recorded a year earlier. Sales dropped in the Midwest and South, while activity rose across the Northeast and West.
The First Trust team observes that sales activity is hovering near pre-pandemic levels, which the analysts view as an effective ceiling over recent years. They point out that geopolitical conflicts in the Middle East and between Russia and Ukraine are lifting energy costs and inflation, driving the average 30-year fixed mortgage rate up approximately 130 basis points since early 2026. The economists also emphasize that the Federal Reserve has resumed raising interest rates, which they argue will place an outsized burden on the housing market.
On the other hand, the economists note that declining purchase prices offer a rare offset for prospective buyers. The median sales price for a new home dropped 3.9% year over year to $400,400 in September, sitting 13% below the peak established in October 2022. Because Census Bureau data show median square footage grew 2.5% between the third quarter of 2022 and the second quarter of 2026, the report explains that buyers are paying less per square foot rather than simply settling for smaller units. First Trust attributes this adjustment to developer price cuts and ample new supply, which remains 260% above its 2022 trough. The economists conclude that "less expensive options and an abundance of inventories" could support a modest sales rebound through late 2026.
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Key terms
1. Months supply: The estimated time required to sell the current inventory of homes at the prevailing monthly sales pace.
2. Basis point: A standard unit of measure for interest rates and financial percentages equal to one-hundredth of a percentage point.
3. Median sales price: The midpoint price level at which half of the homes sold for more money and half sold for less.
Source: Bryce Gill, Economist, Brian S. Wesbury, Chief Economist, and Robert Stein, CFA, Dep. Chief Economist, First Trust Portfolios — Data Watch. Read the original at ftportfolios.com.
