The housing market normally loses momentum in the fall. This year, the slowdown appears to have arrived early.
Mortgage rates near 7% are pushing more buyers to the sidelines. Real Estate News’ Dave Gallagher reports that purchase applications are down 19% from a year ago, pending sales have reached a three-year low, and home tours are declining even as inventory edges higher.
But the most important signal for builders is what sellers do next.
Some will reduce prices or offer concessions—including mortgage-rate buydowns that compete directly with builder incentives. Others, particularly those carrying mortgages at 3% or less, may decide selling at today’s price isn’t worth surrendering yesterday’s financing. They could rent the property or remove it from the market entirely.
Those choices lead to very different competitive conditions for new construction.
More price cuts and concessions would pressure comparable sales and give buyers additional negotiating leverage. More delistings would restrict resale inventory and preserve one of the advantages builders have held in the post-pandemic market: the ability to offer available homes when existing owners remain locked in place.
Builders should watch price reductions, seller concessions, delistings, and days on market together. Buyer demand is clearly softening. The unanswered question is whether resale competition will grow with it—or retreat.
