MW Home builders are aggressively slashing prices on new homes- but buyers aren't biting

By Aarthi Swaminathan

Concerns about the economy and the cost of living are outweighing the appeal to buyers of cheaper newly built homes, builders say

Housing affordability is a key obstacle that has continued to put off many home buyers.

Home builders are escalating discounts and cutting prices on newly built homes, but it hasn't been enough, as demand among buyers remains weak.

Even as a record share of builders slash prices on new homes - making some newly built homes cheaper than existing homes and upending the usual pattern of new homes being more expensive than existing homes - buyers haven't responded, in part because of their concerns about the economy.

Home-builder confidence remained in negative territory in November as economic uncertainty prompted worry among builders.

About 41% of builders reported cutting home prices in November to boost sales, the highest share since May 2020, the National Association of Home Builders said.

The average price reduction was 6% in November, about the same level of discount builders have been offering over the last few months.

Overall sentiment was largely gloomy as builders faced a weak home-buying environment. The NAHB's monthly confidence index rose 1 point to 38, the industry group said. A year ago, the index stood at 46. The higher the index number, the more confident builders feel.

Home buyers aren't feeling much better. About 73% of Americans say the current environment is a bad time to buy a house, a September survey of consumers by housing-finance giant Fannie Mae (FNMA) found.

Some of America's largest home builders, such as D.R. Horton $(DHI)$ and PulteGroup $(PHM)$, have suggested on recent earnings calls that people haven't been buying homes because of worries about the economy.

"There's some uncertainty, and consumer confidence certainly is keeping people on the fence," Paul Romanowski, president and chief executive of D.R. Horton, said in late October on an earnings call.

Even as mortgage rates edged lower over the last few months, "buyer demand ... has been impacted by weaker consumer confidence and ongoing affordability challenges," PulteGroup's chief executive, Ryan Marshall, said in the company's earnings release in October.

Weakness in the labor market, high-profile layoff announcements and the focus on affordability issues during the Nov. 4 elections have kept financial pressures front of mind for many would-be home buyers.

Related: Home builders are struggling, and it's not just because new houses aren't affordable

About 65% of builders used sales incentives in November, unchanged from the previous two months.

Buddy Hughes, chair of the NAHB and a home builder and developer in Lexington, N.C., also pointed to waning consumer confidence about the economy.

"Many buyers remain hesitant because of the recent record-long government shutdown and concerns over job security and inflation," Hughes said in a statement.

The NAHB's chief economist, Rob Dietz, said that a weakening job market and "stretched consumer finances are contributing to a difficult sales environment."

Challenger, Gray & Christmas found that company announcements of layoffs tripled in October and hit the highest level since the pandemic five years ago.

Related: Is the U.S. jobs market tanking? Here's what the latest clues say.

The housing market remains in a deep freeze, with many people finding it too expensive.

Price cuts are often seen as the last lever builders pull to boost sales.

The housing market is also now tipping into a new, more troubled phase, as an increasing number of homeowners are going underwater on their mortgages. Being "underwater" means a homeowner owes more on their mortgage than their home is worth - which is happening more as home prices fall.

Foreclosures are also up 20% year over year, which indicates that people are missing multiple mortgage payments and losing their homes.

Related: Nearly 900,000 new homeowners are underwater on their mortgages, signaling a troubling shift in the housing market

-Aarthi Swaminathan

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November 20, 2025 12:42 ET (17:42 GMT)

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