Forty-three percent. That is the share of builders who reported cutting prices in the National Association of Home Builders’ October survey, the highest this decade.
For anyone shopping for a new home, that can mean room to negotiate. It also looks like a contradiction. America is short an estimated four million homes. Why are builders discounting the homes they have and starting fewer new ones?
A family can need a place of its own and still be unable to afford what is for sale. Need doesn’t qualify for a mortgage.
Builders face two decisions. The first concerns the finished house. Most of its cost is already committed, and every month it sits empty adds interest, taxes and upkeep. Builders who cut prices in October took off 6% on average. On a $400,000 home, that is $24,000. A builder may accept the cut to sell sooner, stop paying to carry the house and free up cash. The second decision concerns the next house. Most of the construction spending is still ahead. The expected price has to cover those costs and justify the risk. Softer prices and higher costs make that harder.
Last month I wrote that the price of time sits under every house. It sits under the ones not yet built, too. Higher rates squeeze builders from both sides: their own loans cost more, and bigger mortgage payments limit what their buyers can afford. A builder can have good reason to discount the house it has finished and good reason to hesitate before starting another.
The construction numbers point the same way. Single-family permits ran at an annual pace of 845,000 in September, 4.8% below a year earlier. Builders started about 4% fewer single-family homes in the first nine months of this year than in the same period of 2025. The shortage I wrote about in August took more than a decade to build up, and slower building makes it harder to work down.
Home buyers can use a softer market to improve the terms of a decision they’ve already made. If you have been saving to buy, new construction belongs in your search. Compare the full cost: the price, the financing and fees, the cash due at closing and the payment after any temporary buydown ends. The right offer leaves room for the ongoing costs of owning, with savings to spare after you move in.
A builder price cut can help one household buy this month. Lasting affordability depends on what gets built next.
– Jeromee (JJ) Johnson, President
