"The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI)'s builder confidence gauge remained negative with a reading of 37, falling two points from December and down 10 points year-over-year. NAHB's survey notes that 65% of builders reported using sales incentives, the 10th month in a row with a share above 60%. The average price reduction across new home sales in January ticked up to 6%, from 5% in December, and 40% of builders reported cutting prices, unchanged from last month."
"Recent Census data indicate that new-home sales prices averaged $392,300 in October 2025, down 8.0% year-over-year. While new-home sales that month spiked 18.7% versus 12 months earlier, prices softened considerably as builders resorted to price reductions, incentives, and mortgage buydowns. This strategy, which became a tactical necessity to sell an unusually high level of started and completed inventory, has eroded homebuilder profit margins."
Builder confidence is low, with the NAHB/Wells Fargo HMI at 37, down two points from December and 10 points year-over-year. Sixty-five percent of builders reported using sales incentives for the tenth consecutive month above 60%. Average new-home price reductions rose to 6% in January, and 40% of builders reported cutting prices. October 2025 new-home prices averaged $392,300, down 8% year-over-year, even as sales rose 18.7% year-over-year. Heavily used incentives, price cuts, and mortgage buydowns to move started and completed inventory have compressed gross profit margins for major public builders. Regional oversupply has weakened prices most in southern and western metros.
Read at www.housingwire.com
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