The U.S. new home market continued shrinking for the seventh consecutive month in February 2025.

We estimate the total valuation of new homes sold in the U.S. last peaked in July 2024 at approximately $28.91 billion. Political Calculations' first estimate of the time-shifted trailing twelve month average of the market capitalization of new homes sold in February 2025 is $26.77 billion.

Over the last seven months, a combination of downward revisions has combined with falling new home sales and flat-to-slowly falling new home prices to result in this outcome.

The downward revisions in the data during this period have been significant. There was a brief moment in August 2024 when it appeared the initial estimate of the market cap of new homes sold in the U.S. exceeded the December 2020 peak of $30.12 billion. Subsequent revisions however have changed that view to the negative.

Overall, there's now enough data to support the observation that at no time during the Biden-Harris administration did the volume and price of new home sales ever exceed the December 2020 peak. The U.S. new home market of February 2025 is effectively about 11% smaller than it was at that time. And it's still shrinking.

The following charts present the U.S. new home market capitalization, the number of new home sales, and their sale prices as measured by their time-shifted, trailing twelve month averages from January 1976 through February 2025.

Flat-to-falling new home sales trend:

Slow downtrend for home prices:

Speaking of initial new home sale price data that will be revised, here's how Reuters reported the initial data for February 2025:

New home sales increased 1.8% to a seasonally adjusted annual rate of 676,000 units last month, the Commerce Department's Census Bureau said on Tuesday. The sales pace for January was revised up to a rate of 664,000 units from the previously reported 657,000 units....

The median new house price fell 1.5% to $414,500 in February from a year earlier.

The median new house price is a figure that we use to measure the relative affordability of new homes. We plan to take a closer look at the affordability of new homes in February sometime next week.

References

U.S. Census Bureau. New Residential Sales Historical Data. Houses Sold. [Excel Spreadsheet]. Accessed 25 March 2025. 

U.S. Census Bureau. New Residential Sales Historical Data. Median and Average Sale Price of Houses Sold. [Excel Spreadsheet]. Accessed 25 March 2025. 

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