"Forget waiting for lower rates. The affordability ceiling has structurally reset. Even as mortgage rates ease, affordability remains the defining constraint on homebuilding demand, the report states bluntly. U.S. home prices rose 4.4% in 2025, outpacing wage growth. The National Association of Realtors' Housing Affordability Index hit its lowest level since 1989. In Canada, mortgage payments now consume 54% of average household income, far above the historical average of 35%."
"Rising land, material, and financing costs have set a new price floor that even lower interest rates can't erase, the report concludes. Yesterday's models of demand elasticity no longer apply. Builders who succeed in this environment will be those who internalize cost discipline, incorporate financing options, and redesign products for livability at lower price points not those waiting for tailwinds."
Affordability has become the primary constraint on homebuilding demand, with U.S. home prices rising 4.4% in 2025 and the Housing Affordability Index at its lowest since 1989. In Canada, mortgage payments now consume 54% of average household income versus a historical 35% average. Rising land, material, and financing costs have created a new price floor that lower interest rates cannot erase. Builders report weak demand and must pursue cost discipline, offer financing options, and redesign homes for livability at lower price points. Land complexity, industry consolidation, and digital maturity will separate resilient builders from vulnerable ones. Six key signals define future performance and strategic priorities.
Read at www.housingwire.com
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