By Aarthi Swaminathan
The share of builders slashing prices on newly built homes reaches a three-year high, industry group says
The numbers: Home-builder confidence was up marginally in July, as demand for homes remains weak and as builders ramp up price cuts in a frenzied attempt to boost sales.
Builders’ sentiment rose 1 point in July, boosted by the passage of President Donald Trump’s One Big Beautiful Bill Act, but it remains low overall due to concerns about high interest rates and economic and policy uncertainty that could keep the pace of home sales sluggish.
The National Association of Home Builders’ monthly confidence index rose 1 point in July to 33, the industry group said on Thursday. A year ago, the index stood at 41.
In some markets where home builders have been active, such as in Florida, they have been offering sales incentives that are “so outrageous” it’s like they are giving homes away, one expert said.
Big picture: High home prices and 7% mortgage rates are weighing on the housing market. Home sales remain anemic as buyers find little reason to jump in. They’re also reluctant to buy because the future of the U.S. economy looks uncertain.
“The housing sector has weakened in 2025 due to poor affordability conditions, particularly from elevated interest rates,” Buddy Hughes, a home builder and developer from Lexington, N.C., and the chair of the NAHB, said in a statement.
Cuts in home prices haven’t stimulated sales much. Many sellers have the option to delist their home and wait out the market, but most builders need to clear their inventory.
So they’re ramping up the deals. Oliver Radvin, senior vice president at John Burns Research and Consulting, said that based on their own builder-survey data in June and what he’s seen and heard in Jacksonville, Fla., and across the state, many builders were decreasing prices to bring buyers in – on top of offering incentives such as assistance with closing costs.
“We know from our fieldwork in the market, builders are often advertising (and using) a combination of interest-rate buydowns, closing-cost assistance, credits toward option spend and other incentives along with outright price cuts … in order to make sales,” he said.
“Yes, builders are making sales,” Radvin added, “however, it is taking lofty incentive packages to get there.”
Read more: The housing market is sending a stark warning to the U.S. economy, Moody’s economist says
Weak demand could affect the pace of home building for the rest of the year. “Single-family housing starts will post a decline in 2025 due to ongoing housing affordability challenges,” Robert Dietz, chief economist at the NAHB, said in a statement.
Key details: In July, 38% of builders cut home prices, which was the highest share since the NAHB began tracking this figure in 2022. The average price reduction was 5% in July, unchanged from the previous month.
The use of sales incentives was also unchanged from last month, with 62% of builders offering them. These include offering mortgage-rate buydowns, where the builder temporarily offers a lower rate to the buyer for a set period before it adjusts upwards.
Read more: Home sellers have gotten tired of cutting prices. So they’re yanking their houses off the market.
The three gauges that underpin the overall builder-confidence index were mixed:
— Builders were more upbeat about current sales conditions. The gauge rose 1 point.
— Builders were more optimistic about sales expectations in the next six months. The gauge rose 3 points.
— Builders do not expect an uptick in traffic from prospective buyers. The gauge fell by 1 point to the lowest reading since the end of 2022.
-Aarthi Swaminathan
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07-18-25 1250ET
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