China Home Prices Keep Sliding

China’s new-home prices fell again in March, even as the country’s largest cities showed tentative month-on-month improvement. The data point to a housing market still constrained by weak demand, high inventories and cautious buyers after years of stress among developers.

New-home prices remain under pressure

China’s new-home prices across 70 major and medium-sized cities declined 0.2% in March from February, according to calculations by Reuters based on official data. The monthly drop narrowed from 0.3% in February, but prices still failed to return to broad-based growth. On a year-on-year basis, Trading Economics data showed a 3.4% fall, widening from 3.2% in February and marking the 33rd consecutive month of annual contraction.

The new commercial residential housing index measures sales prices for newly built homes rather than the entire housing stock. From January 2026, China’s statistical system shifted the base period for its 70-city housing-price survey to 2025; the average effect of that change on monthly year-on-year indices was estimated at within 0.03 percentage point.

Major cities show a limited improvement

The largest cities presented a mixed picture. Beijing’s new-home price index was flat from February but remained 2.1% below the level of March 2025. Shanghai rose 0.4% month on month, although its annual index in the new-home table stood at 93.8, indicating a decline from a year earlier. Guangzhou increased 0.2% from February but was still 8.1% lower year on year, while Shenzhen gained 0.4% on the month and remained 7% below the previous year’s level.

This split matters for investors. China’s first-tier cities usually respond faster to mortgage easing, relaxed purchase rules and local support measures. But gains in large urban centers have not yet offset weakness in smaller cities, where unsold supply is heavier and income expectations are more fragile.

Second-hand homes signal fragile confidence

Second-hand homes, meaning properties already owned and resold by households, are usually less affected by direct administrative price guidance. In March, Beijing’s second-hand housing index stood at 100.6 compared with February but only 91.7 compared with a year earlier. Tianjin recorded 99.8 month on month and 93.8 year on year.

The resale market has become an important gauge of household confidence. After developer defaults and construction delays, some buyers have preferred completed homes, but discounts in the existing-home market continue to weigh on new-build pricing. That limits developers’ ability to lift prices even where transaction activity has improved.

Investment and sales data show deeper stress

From January to March 2026, China’s real estate development investment totaled 1.772 trillion yuan, down 11.2% from a year earlier. Residential investment fell 11%, floor space under construction declined 11.7%, and newly started construction dropped 20.3%. Sales of newly built commercial buildings fell 10.4% by floor area and 16.7% by value.

The residential segment was weaker still: new residential sales declined 13.1% by floor area and 18.5% by value. That gap suggests developers are facing both lower volumes and persistent price pressure, with revenue falling faster than the amount of space sold.

Inventories remain a drag on recovery

At the end of the first quarter, commercial housing available for sale stood at 786.01 million square meters, almost unchanged from a year earlier, while residential inventory rose 1.4%. With sales still falling, destocking remains slow and developers have limited room to reduce discounts.

Fitch Ratings said in late March that the decline in new-home sales could narrow in the second quarter, a period that has accounted for about 28% of annual sales on average over the past five years. The agency also warned that sentiment remained fragile because of weak employment conditions, elevated housing inventories and geopolitical uncertainty.

Policy support has yet to restore demand

Chinese authorities have used a range of housing-market support measures over the past two years, including easing purchase restrictions in some cities, improving mortgage conditions, backing completion of unfinished projects and exploring the conversion of unsold homes into subsidized housing. March data suggest those steps have slowed the deterioration but not reversed it.

The core issue is no longer only the price of credit. Buyers are weighing employment, income prospects, the risk of further price declines and the reliability of developers. That makes a durable recovery harder than a short-term rebound in transaction numbers.

As experts at International Investment report, the March figures point to a slower decline rather than a real recovery. The critical risk for investors is that improvement in top-tier cities may conceal structural weakness in provincial markets, where excess supply, falling construction starts and shrinking developer revenue continue to pressure prices. A sustainable turnround would require not just targeted stimulus but a broader recovery in household confidence, income expectations and trust in project delivery.

FAQ

Why are Chinese home prices still falling?
Prices are under pressure because demand remains weak, inventories are high, buyers are cautious and many developers are still dealing with financial strain. A slower monthly decline does not yet mean a full recovery.

What does the new commercial residential housing index measure?
It tracks prices of newly built homes sold in the market across 70 large and medium-sized Chinese cities. It does not directly measure the value of the entire existing housing stock.

Why are major cities performing better?
Beijing, Shanghai, Guangzhou and Shenzhen have deeper labor markets, stronger income bases and more resilient housing demand. They often react faster to policy easing, but their performance does not represent the whole country.

When could China’s property market stabilize?
Stabilization would require lower inventories, stronger sales, improved household income expectations and reduced concern over unfinished projects. Current data still point to an extended correction.