In July 2025, new home sales totaled 0.652 million, exceeding the estimate of 0.630 million. This represents a slight decrease of 0.6% from June, when sales were revised up to 0.656 million from an initial report of 0.627 million. Compared to last year, new home sales have dropped by 8.2%. During this time, mortgage rates went above 6.75%, but this rise is not reflected in the current sales figures. The median home price decreased to $403,800, which is a 0.8% drop from the previous month and a 5.9% decline from last year’s price of $429,000.

Average Sale Price Update

The average sale price for homes was $487,300, down 3.6% from June’s price of $505,305 and from July 2024’s price of $513,200. The housing supply decreased to 9.2 months from 9.8 months. Builders have lowered prices to attract buyers in this challenging market. Recent data comes before the latest drop in mortgage rates, which have now approached 6.5%, the year’s lowest level. The July new home sales figures showed better results than expected, but there’s still concern with an 8.2% annual decrease in sales. This mix of signals indicates that the housing market remains fragile despite some strength. For traders, this uncertainty may be an opportunity in homebuilder ETFs such as ITB or XHB.

Implications of Recent Mortgage Data

This data collection occurred before mortgage rates fell back to around 6.5% in early August 2025. It suggests that August sales could see a rebound as lower borrowing costs attract buyers back to the market. Considering this, it may be wise to take short-term bullish positions, like buying call options that expire this fall, to possibly benefit from this upward movement. A similar trend was observed in late 2023 when falling rates temporarily increased sales activity, making this a familiar setup for a tactical trade. The Mortgage Bankers Association reported a small rise in mortgage applications in the first half of August 2025, supporting the idea of a potential rebound. This highlights the importance of the Federal Reserve’s next meeting in September; any indication of maintaining rates could further boost the housing market. While we may see a short-term increase, the significant 5.9% year-over-year drop in median prices is a key concern. This decline suggests that builders are losing pricing power and that consumer affordability remains a critical challenge for the economy. Therefore, it is wise to hedge any bullish positions in homebuilders by considering put options on financial sector ETFs, which are affected by economic slowdowns. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now