When Will New Car Prices Drop?

Quick Facts About New Car Prices

• The new vehicle average transaction price (ATP) in June was $49,758, up 0.4% from May and 0.6% higher than one year earlier. 
• We also saw a slight increase in the average interest rate on auto loans from 9.53% in May to 9.58% in June. The average monthly payment was $763. Affordability remains a real challenge for the average buyer, though demand remains resilient.
• As prices continue to rise moderately year over year, many buyers are adjusting their budgets to fit the current market, rather than waiting for economic uncertainty to subside.

The average transaction price (ATP) for a new vehicle was $49,758 in June 2026. This represented a modest 0.4% increase from May and a 0.6% year-over-year increase. However, ATP doesn’t always show the whole picture. Roughly 24% of available inventory at the end of June was in the $30,000 to $40,000 price range, with an average listing price of $35,377. Of the vehicles sold in June, 28% were in this price range. Sales in segments such as full-size pickups and luxury models continue to drive up the overall ATP.

Of course, this doesn’t mean that affording a new car is any easier for the average buyer. While ATPs have risen modestly so far, broader economic pressures on American households are also factoring into the car affordability equation. Careful shoppers may still find some good deals, but incentive spending in June held steady at 7% of ATP, down slightly from May’s 7.1%. Manufacturers are showing discipline in incentive spending, though incentives remain elevated for full-size pickups and luxury vehicles. If you’re shopping in those segments, you might have some luck. For other buyers, the landscape is unlikely to shift dramatically in the near future.

Read on for expert insights into what’s driving these trends and what you need to know if you’re planning to start your search or buy a car now. 

• Where New Car Prices Stand
• The State of Electric
• New Car Inventory Update
• Shop Around for the Best Offer on Your Trade-in
• What to Expect: Looking Ahead

New Car Prices Continue This Year’s Modest Rise

The new vehicle ATP in June was up 0.4% from May. June’s $49,758 ATP edged up 0.6% year over year, but remained below $50,000 for most of this year. That follows a peak of $50,609 in December 2025, a month when prices commonly peak due to a high mix of luxury-vehicle sales.

Because ATP is only an average, it can be helpful to take a look at segment-specific ATPs to better understand the prices in the segment where you are shopping:

• Midsize SUV: $49,792, up 2.2% year over year
• Compact SUV: $37,707, up 3.7% year over year
• Full-size pickup truck: $66,427, up 2.1% year over year
• Subcompact SUV: $31,133, up 2.3% year over year
• Compact car: $27,978, up 2.4% year over year

“The strength of midsize SUVs, with sales up more than 16% year over year, shows that consumers are gravitating toward the center of the market where value, utility, and affordability intersect,” explained Cox Automotive Executive Analyst Erin Keating. “In 2026, ‘mid’ is in.” Cox Automotive is Kelley Blue Book’s parent company. While all segments are showing ATP increases, compact cars and subcompact SUVs continue to have the lowest listing prices. If you’re looking to spend as little as possible, consider starting your search here, even though midsize SUVs are currently popular.

June sales were healthy, and Kelley Blue Book estimates that sales volume was up 7.6% year over year. Throughout 2026, we’ve seen restrained incentive spending among automakers. It slipped from 7.1% of ATP in May to 7% in June. During the past 13 months, incentive spending has averaged 7% of ATP. Automakers remain disciplined, with an eye on profitability. Full-size pickups and luxury vehicles are the segments where incentives remain elevated.

With ongoing conflict in the Middle East and rising economic pressure on the average household, the industry is keeping a close watch on consumer sentiment. “One of the biggest shifts in today’s market is that consumers are no longer waiting for uncertainty to disappear,” said Keating. “After several years of inflation, high interest rates, and policy volatility, many buyers have come to view uncertainty as the new normal. If they need a vehicle, they’re moving forward and adjusting their budget and vehicle choice accordingly.”

Many buyers simply need a vehicle and cannot wait for international conflicts to end or economic conditions to improve. Explore Kelley Blue Book’s Car Affordability Information Center for curated articles designed to help you make smart, budget-friendly decisions.

MORE: Can I Afford a Car in 2026?

The Electric Landscape Moderates in June

May sales showed strong month-over-month increases, but the market moderated in June. New electric vehicle (EV) sales were down 15.2% from May and 27.8% year over year. Sales totaled an estimated 74,967 units, accounting for 5.4% of total new vehicle sales. Tesla continued to dominate, with 40,460 units sold, increasing its market share to roughly 54%, up from 47.9% in May. Rivian, Toyota, Cadillac, and Hyundai followed. Rivian rose to the No. 2 position and posted an 8.3% month-over-month sales increase in June, but most EV brands posted declines.

The average ATP for a new EV rose to $56,238 in June, up 3.5% from May. This was the largest monthly increase since June 2025, but the ATP remained 4.5% lower than a year earlier. Incentives averaged $7,290, easing to 13% of ATP from May’s 14%. While Tesla helped drive EV prices lower in previous months, it was not the primary factor in June. Tesla’s $53,107 ATP rose modestly from May but remained 2.1% below last year’s levels. Rather, overall ATP rose because higher-priced EVs accounted for a larger share of the market as sales declined sharply among high-volume, lower-priced brands such as Hyundai and Chevrolet.

Inventory levels for new EVs increased in June. Overall days’ supply rose to 81, up 14.7% from May. Inventory still remains significantly below year-earlier levels despite this increase, with days’ supply down 32.4% year over year. Inventory levels vary widely by brand. Subaru, Lexus, Hyundai, Mercedes-Benz, and Cadillac recorded some of the lowest inventory levels in the market, while Volkswagen, Porsche, Nissan, and Chevrolet recorded among the highest.

“The EV market is expected to remain in a more measured growth phase in the months ahead,” said Cox Automotive Director of Industry Insights Stephanie Valdez Streaty. “While June sales softened, inventory levels remain well below year-ago levels, suggesting supply conditions remain relatively disciplined. Competitive pressure is likely to remain elevated in the new market as automakers balance pricing, incentives and production plans, while expanding used EV availability continues to support broader consumer access and long-term adoption.”

What Drives New Car Prices

New car prices are not established by any single factor. They reflect a complex interplay between the following:

When any one of these factors shifts, the others may adjust to accommodate the impact.

New Car Inventory Update

Dealerships track the number of new vehicles they have on hand using a metric called “days’ supply,” or how long it would take them to sell out at today’s sales pace if they stopped adding new vehicles. According to Cox Automotive’s vAuto Live Market View, new car inventory data for June showed 80.3 days’ supply, up from 78 days in May. This increase appears to have been caused by softer sales rather than growing inventory. Inventory levels have remained relatively stable throughout 2026, suggesting that most automakers have taken a disciplined approach to managing supply.

Total available inventory decreased to 2.82 million units in June, down from May’s 2.89 million but roughly unchanged year over year. “June’s inventory data suggests that inventory levels remain stable, sales remain healthy despite economic headwinds, and days’ supply continues to hold in a range that most automakers would consider manageable,” said Keating. “And while affordability remains a challenge for many consumers, the industry’s largest inventory concentrations are still centered well below the headline-making average of $50,000.”

The real inventory story in June is at the brand level. Toyota ended the month with the tightest inventory at 37 days’ supply, followed by Lexus and Honda. These three continue to see strong demand and lean supply, enabling them to sell vehicles quickly. At the other extreme, some brands are trying to work through much larger inventories. Stellantis brands Jeep, Ram, and Dodge all continue to carry high inventory levels.

What does this mean for car shoppers? The short answer is that there is no significant change from where the market has been for most of this year. However, while inventory levels look balanced overall, the distribution is certainly not even across all brands. Unfortunately, this isn’t helping consumers much. Even brands with high days’ supply continue to show restraint in incentive spending. You may still find a deal, but it probably won’t be with a brand with especially low days’ supply.

Shop Around for the Best Offer on Your Trade-in

Trade-in value is another factor driving car prices. A lack of used-vehicle stock has kept prices higher, giving credence to the idea that buying a new vehicle can sometimes be cheaper than purchasing a used model that’s only a few years old. As a result, it’s still a potentially good time to trade in your car. 

Dealers value your trade-in partly based on what they need in stock, so if you have a popular model, you may be in luck. On the other hand, they may offer less or a model already plentiful on their lots. In other words, a buyer trading in a 2018 Honda Civic for something else may be much happier with the trade-in appraisal than a shopper trading in a 2021 Jeep Grand Cherokee. 

Car buyers should prepare to shop around for the best trade-in offer. It requires another step, but selling your old vehicle to one dealership and buying your new car from another may make sense if the final numbers work in your favor. Use the Kelley Blue Book Instant Cash Offer tool to shop your trade-in vehicle at nearby dealerships. Comparing multiple bids makes it easier to choose the best trade-in offer. Remember, you can always negotiate the offer, and using one offer to counter another is not unheard of when shopping for a vehicle. 

What to Expect: Looking Ahead

New-car inventory in June was down modestly from May and mostly unchanged year over year. The U.S. market had 2.82 million new vehicles available, or about 80 days’ supply. This is still a notable decline from the roughly 90 days’ supply recorded in January and February, but year-over-year inventory was stable. The industry has shown resilience in the face of rising gas prices, uncertainty surrounding the war in the Middle East, and growing economic pressure at home.

For buyers, this means that while prices aren’t skyrocketing, they continue to rise gradually. If you’ve been holding out in the hope that geopolitical uncertainty will ease, it may be time to consider that the trends seen throughout 2026 could persist. Options in lower price brands remain limited, though shoppers willing to consider different brands and models can still find incentives to help lighten the financial burden. We will continue monitoring the war’s effect on the market as summer continues.

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What to Do if You Need a Car Now

Incentives are a buyer’s best friend in the current market. If you can adjust your expectations about the type of car or brand you are willing to buy, you may find good deals. Beyond that, prices remain on a steady, modest upward trend. Before buying: 

• Research your options and expand your search if needed.
• Look for deals and incentives, especially on vehicles that dealers may be trying to sell to make room for newer models.
• Shop ahead for a car loan if you’re not paying cash.

RELATED: Paying Cash for a Car: Consider the Pros and Cons

Editor’s Note: We have updated this article since its initial publication.