U.S. homebuilders are grappling with persistently low buyer interest driven by high mortgage rates (around 7%) and steep home prices, causing their confidence levels to plummet to the lowest in more than two years. In June and July, nearly 37–38% of builders reduced home prices—averaging around a 5% cut—while approximately 62% offered incentives like mortgage rate buydowns, closing‑cost help, and builder credits to entice buyers.
Despite these aggressive moves, demand remains fragile. Unlike individual sellers who can pull listings, builders must sell their inventory, pushing them to introduce larger discounts and incentives to close deals. The National Association of Home Builders warns that without improved affordability, housing starts and single‑family construction will likely decline into late 2025.
These developments suggest a prolonged slowdown, with a potential market rebound not expected until mid‑2026, especially if interest rates ease and consumer confidence returns.