July 2026 marked the worst month for video game console sales in the United States since July 2020, a period marred by the COVID-19 pandemic's severe inventory and logistical challenges. According to Circana's latest market sales report, total hardware spending plummeted 29 percent year-over-year, reaching $282 million for the month. This figure is a stark contrast to the pandemic-affected low of $163 million recorded in July 2020.
Unit sales experienced an even steeper decline, dropping 39 percent compared to the previous year. Simultaneously, the average price for new hardware units increased by 16 percent, now standing at $542. All three major console manufacturers saw reductions in their sales. Nintendo's Switch 2 sales were down 51 percent, a figure impacted by a comparison to last year's July, which coincided with the Switch 2's launch window. Sony's PlayStation 5 unit sales decreased by 6 percent, while Microsoft's Xbox Series consoles saw an 18 percent drop.
The report attributes these declines not only to cyclical market factors but also to the ongoing global RAM and component crisis. This shortage has driven up hardware costs, significantly affecting the sales rates of the PlayStation 5 and Xbox Series consoles. Furthermore, a price increase for the Nintendo Switch 2 hardware is scheduled for September 1, 2026, adding to consumer concerns about rising costs.
Despite the overall downturn, the PlayStation 5 was the top-selling console in terms of dollar sales for July. However, the Switch 2 led in unit sales and continues to outperform the original Switch at the same point in its lifecycle, holding an 11 percent lead. The broader video game market also felt the impact, with overall games spending decreasing by 10 percent year-over-year, influenced by the reduced hardware sales and a notable drop in software spending.