Homebuilders Struggle as Home Prices Fall

During the housing boom generated as a result of the pandemic builders were able to take advantage of the hot market and low interest rates to turn a high profit and increase their production volume. There was a severe undersupply of homes compared to the number of new prospective buyers, allowing them to thrive. Now that the housing market is beginning to shift back toward normal levels of demand, builders are beginning to fear something that was unthinkable six months ago: oversupply.

This shift in the market has created a record number of unsold homes that are currently being built, and the rising mortgage rates are also causing home buyers under contract to cancel now that the rates have made the home unaffordable. One of the biggest home builders in the country, D.R Horton saw their cancellation rate jump to 24% as of June 30th, 2022. 

With the memory of the 2008 housing bust still fresh in their minds, many home builders are now in a rush to incentivize buyers to purchase new construction. They are now offering incentives such as price cuts, paying for closing costs, money towards upgrades, and other buyer advantages depending on their local housing market. 

If you are looking for a newly built home, now may be the time for you to take advantage of this situation. Give us a call today to discuss your options so that we can find the perfect home for you!

For more information on the new construction market, take a look at this in depth article from Fortune.