Real Estate
CNBC

Homebuilders are slashing prices at the highest rate in 3 years

July 17, 2025
05:50 PM
4 min read
AI Enhanced
economystocksfinancial

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More homebuilders are cutting prices as interest rates remain stubbornly high, and potential buyers pull back over concerns in the economy.

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4 min read

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real estate

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Published

July 17, 2025

05:50 PM

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CNBC

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Key Topics
economystocksfinancial

Builder confidence has been in negative territory now for 15 straight months

Moreover, Confidence rose slightly in July due to the recently passed budget bill

Buyer traffic saw a 1 point drop to 20, which is the lowest reading since the end of 2022

A construction worker carries a sheet of OSB sheathing as he builds a roof on a residential s in Irvine, California, U

However, , March 28, 2025

However, Mike Blake | ReutersThe nation's builders continue to see weakening demand from potential buyers concerned the broader economy

As a result, they are cutting prices at the highest rate in three years, according to the monthly builder confidence survey from the National Association of Builders, in light of current trends

Builder confidence in July rose 1 point to 33 on the NAHB index, a slight imvement

On the other hand, Still, anything below 50 is considered negative sentiment

The data indicates that index stood at 41 last July, and it has been in negative territory now for 15 straight months (this bears monitoring)

The slight boost this month came from the recently passed budget act, which vided some tax relief for households, builders and small es

At the same time, Mortgage rates, however, have been hovering in the same narrow, elevated level for several months, given the current landscape

Additionally, "While this new law should vide economic momentum after a disappointing spring, the housing sector has weakened in 2025 due to poor affordability conditions, particularly from elevated interest rates," said Buddy Hughes, NAHB chairman and a builder from Lexington, North Carolina

Conversely, That's why 38% of builders said they cut prices in July, the highest since the NAHB began tracking the metric in 2022 (this bears monitoring)

Just 29% were cutting back in April

On the other hand, This tells us that average price reduction was 5% in July, where it has been every month since November (an important development)

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Furthermore, Builders have been buying down mortgage rates to help get buyers in the door, which has cut into their margins some, but not as much as price cuts. "Should the public builders supplement mortgage rate buydowns with more outright price reductions they would ly experience a larger negative gross margin and EPS drag as they would be unly able to offset the margin drag with increased volumes and SG&A leverage," said Jonathan Woloshin, real estate and lodging analyst with UBS, in light of current trends

Furthermore, Of the index's three components, current sales conditions rose 1 point to 36 and sales expectations in the next six months increased 3 points to 43, in today's market environment

Buyer traffic saw a 1 point drop to 20, which is the lowest reading since the end of 2022, considering recent developments. "Single-family housing starts will post a decline in 2025 due to housing affordability challenges," said Robert Dietz, chief economist at the NAHB

Additionally, At the same time, "Single-family permits are down 6% on a year-to-date basis and builder traffic in the HMI is at a more than two-year low (which is quite significant) (an important development). "Regionally, builder sentiment was strongest in the Northeast where it rose 2 points, flat in the Midwest and dropped further in the South and West, where it was weakest

Correction: Builder sentiment in the Northeast rose 2 points

An earlier version misstated the move

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