Sales of newly constructed homes in the United States retreated to a six-month low in July, signaling that persistently high mortgage rates continue to weigh on buyer demand even as developers roll out price cuts and attractive incentives.

According to government data released on Tuesday, purchases of new single-family homes tumbled 10.5% last month to a seasonally adjusted annual pace of 607,000 units. That figure fell short of the 620,000-unit median forecast projected by economists surveyed by Bloomberg.

The median sales price dipped 0.9% from a year earlier, landing at $393,800. This marks the third decline in new home sales over the past four months, underscoring how elevated financing costs and steep property prices are placing sustained pressure on the housing market.

While builders have managed to spur some activity through tactics like complimentary upgrades, discounted mortgage rates, and outright price reductions, the entry-level segment continues to struggle under the weight of affordability constraints that remain out of reach for many prospective buyers.

The government report also revealed that the supply of new homes available for sale contracted 1.6% year-over-year to 488,000 units in July, which translates to a 9.6-month inventory buffer at the current sales velocity. In response, developers are scaling back the pace of new construction in an effort to clear the backlog of unsold properties sitting on the market.