Builder Bargains | The Residential Specialist

Homebuilders cut prices for newly built homes in 2023 as the slow start to construction in 2022 resulted in a glut of unsold inventory.

The slowdown was caused by lower demand for homes due to rising mortgage rates and the fact that more Americans are renting instead of buying. The increase in rental stock has resulted in less demand for new homes and has pushed builders to cut prices to clear out inventory.

In addition, inflated prices combined with lingering shortages of building materials have further dampened builders’ taste for new home starts.

There have been a lot of signs that the market is slowing down—the main cause being interest rates hikes—but this is one of the first concrete signs that this slowdown has begun to impact builders.

So, what does this mean for 2023? It means we’ll see even more price cuts and slower construction starts as builders try to manage their inventory so they aren’t stuck with too many unsold homes on their hands.

Robert Dietz, chief economist of the National Association of Home Builders (NAHB), offered a prediction that the pace of new single-family starts would continue to slow through the first half of 2023 and begin climbing once the Federal Reserve Board can stabilize interest rates.