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Builders rely more on incentives as pricing power erodes
NAHB data shows 66% of builders were using sales incentives in September, and 38% reported cutting prices by an average 6% as inventory stays tight.
HousingWire reports homebuilder margins are coming under pressure as elevated mortgage rates and construction costs strain affordability, leaving builders more dependent on promotions and price reductions to sustain sales.
According to National Association of Home Builders data cited by HousingWire, 66% of builders used sales incentives in September, the highest share since December, while 38% were cutting prices, with the average reduction at 6%. HousingWire adds that inventory remains elevated, with Census Bureau data showing 488,000 new homes for sale in July, equivalent to 9.6 months of supply, and new-home sales down 6.3% year over year.
With less ability to offset pressures through higher list prices, HousingWire says margin protection is increasingly linked to controlling product complexity earlier in the process, since builders cannot control factors such as mortgage rates, buyer confidence, or many outside construction costs.
HousingWire also notes NAHB’s Q2 affordability finding that a median-income household would need to devote 34% of its income to the mortgage payment on a median-priced new home.