Builders Increase Incentives to Attract Buyers
Originally Published by: Builder Online — June 23, 2025
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New-home sales continued to slide in May at the same time inventory is growing in the resale market, according to the latest New Home Market Update from Zonda.
Zonda’s new-home sales metric, which accounts for both cancellations and seasonality, indicates there were 682,290 new homes sold in May on a seasonally adjusted annualized rate, a 0.9% decline from April and a drop of 5.8% compared to May 2024. On a non-seasonally adjusted basis, 61,168 homes were sold, down 5.3% from last year and down 10.1% from the same month in 2019.
Amid the slowdown in new-home sales, consumers have more options across the new-home, resale, and rental markets, according to Zonda. Approximately 60% of the top markets nationally have more resale inventory than in 2019 while rental markets—particularly in the Sunbelt region—have seen a surge in supply, cooling asking rents.
Zonda’s New Home Pending Sales Index (PSI), which accounts for fluctuations in supply by combining total sales volume with the average sales rate per month per community, came in with a reading of 130.2 in May. The May 2025 index value was 6.7% lower than the same month in 2024 and 25.3% lower than cycle highs.
To provide further context to the new-home sales environment, the Zonda Market Ranking (ZMR) accounts for both sales pace and volume, is seasonally adjusted, and is taken as a percentage relative to a baseline market average. As a result, the ZMR rates markets on a scale from “significantly underperforming” to “significantly overperforming” relative to historical activity. The national ZMR index was 108.4 in May, flat on a month-over-month basis and indicative of an “average” market.
In an effort to find the market, 38% of builders lowered prices in May, according to Zonda’s monthly survey of builders. Additionally, 57% of new-home communities in May offered incentives on to-be-built homes and 75% on quick move-in (QMI) supply. In the entry-level market, the average price fell 1.4% to $328,007; the average move-up price fell 0.4% to $520,193. In the high-end market, the average price rose by 1.0% to $918,161.
According to Zonda, there were 16,278 actively selling communities in May, up 8.6% from the same month in 2024. May marked the sixth consecutive month that community count increased. National QMI levels increased 18,9% on a year-over-year basis to 36,123. Zonda categorizes a QMI home as one that can be occupied within 90 days.