Subdued Property Sales amid Weaker Home Prices in July

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Update

August 17, 2026 03:18 PM GMT

Morgan Stanley Asia Limited+

China Property | Asia Pacific

Stephen Cheung, CFA

Equity Analyst

Subdued Property Sales amid

Weaker Home Prices in July

Cara Zhu

Equity Analyst

New home sales decline stayed deep in July amid weaker home

prices and construction activity, as we expected. We see the

continued softening in secondary sales leading to faster home

price drops, weighing on primary sales in 2H, together with less

new supply.

China Property

Asia Pacific

Industry View

In-Line

Related reports:

Primary sales remained lukewarm in July, despite the lower base: Rebased

1. Lowering Full-year Forecasts on Weak Land

national sales fell 8.9% y-y by value and 11.8% y-y by volume (June: -13.9% and -

Sales (9 August 2026)

14.3%), bringing 7M26 YTD sales declines to 13.1% y-y by value and 11.8% by volume.

2. Leading Indicators Worsened Further in July (2

While the NBS 70-city home price index edged down at a steady pace (-0.2% m-m in

August 2026)

primary and -0.3% in secondary), more cities registered flat/lower prices in July. In

3. An Inflection or Another False Start? (18 May

particular, Tier 1 cities recorded milder home price gains, flat in primary and +0.2%

2026)

m-m in secondary (June: +0.1% and +0.3%) amid softening secondary sales.

4. Leading Mall Operators - Hidden Gems in the

Construction activity stayed subdued: New starts fell 28% y-y and completions fell

19% y-y in July, bringing 7M26 declines to 24% and 23%, respectively. Combined with

the smaller construction scale, the decline in real estate investment (REI) deepened

to 19.2% y-y in 7M26 (6M26: -18.0%). We have recently lowered our full-year

Consumption Space (3 August 2026)

5. 2026 Outlook: Physical Market Stays

Challenging; Diverging Outperformance of

Alpha Plays (10 December 2025)

forecasts – we expect the sluggish land market YTD could hamper both REI and

primary home sales in coming quarters due to limited supply of new launches.

We expect deeper home prices declines: Real-time secondary home sales in 25

higher-tier cities continued to soften, reaching ~7% y-y in latest week (vs. 10% in

…