New home sales fall 5.3% year over year in September with average price $400,400

New home sales in the U.S. ran at a seasonally adjusted annual rate of 676,000 in September, marking a 5.3% decrease compared to the same period last year, according to HousingWire reporting on U.S. Census Bureau data.

The average price of new homes sold was $400,400, which is 3.9% lower than the $416,800 average price recorded a year earlier. Despite some price increases from July and August, builders have been offering discounts and incentives to attract buyers amid affordability challenges.

Builder sentiment has weakened, with the National Association of Home Builders' confidence index dropping to its lowest level since June 2012. Many homebuilders report worsening sales conditions from summer into fall, impacted by high mortgage rates and economic uncertainty.

On a positive note, fewer new construction starts, especially in oversupplied markets in the Sun Belt, have helped builders reduce their standing inventory, which remains above historical levels. However, sales volume and prices remain down year over year.

National Association of Home Builders assistant VP Danushka Nanayakkara-Skillington noted that despite price adjustments and incentives, elevated mortgage rates continue to limit sales activity. More new homes are selling below key price thresholds, with 51% priced under $400,000 in September, up from 46% a year earlier.