Prices of New Houses Drop, Sales Drop, Supply Jumps

September 27, 2023

by Wolf Richter Wolf Street

Cut the price, and they will not come? Homebuilders, in a tough market, compete with homeowners who are still delusional.

Homebuilders are trying all kinds of stuff to get sales going in this environment of 7%-plus mortgage rates, including cutting prices, building at lower price points, piling on incentives (such as free upgrades), and the biggie, buying down mortgage rates, which can get expensive for builders. Neither incentives nor mortgage-rate buydowns are reflected in the prices of homes sold, and yet prices have dropped, and sales have dropped too below 2019 levels, and inventory increased, and months supply jumped. For homebuilders, who cannot sit out this market because their business is to build and sell homes no matter what the market does, it’s not an easy environment.