A construction worker carries a sheet of OSB sheathing as he builds a roof on a residential homes in Irvine, California, U.S., March 28, 2025. Mike Blake | ReutersThe nation’s homebuilders continue to see weakening demand from potential buyers concerned about the broader economy. As a result, they are cutting prices at the highest rate in three years, according to the monthly builder confidence survey from the National Association of Home Builders.Builder confidence in July rose 1 point to 33 on the NAHB index, a slight improvement. Still, anything below 50 is considered negative sentiment. The index stood at 41 last July, and it has been in negative territory now for 15 straight months.The slight boost this month came from the recently passed budget act, which provided some tax relief for households, home builders and small businesses. Mortgage rates, however, have been hovering in the same narrow, elevated level for several months.”While this new law should provide economic momentum after a disappointing spring, the housing sector has weakened in 2025 due to poor affordability conditions, particularly from elevated interest rates,” said Buddy Hughes, NAHB chairman and a builder from Lexington, North Carolina.That’s why 38% of builders said they cut prices in July, the highest share since the NAHB began tracking the metric in 2022. Just 29% were cutting back in April. The average price reduction was 5% in July, where it has been every month since November.Get Property Play directly to your inboxCNBC’s Property Play with Diana Olick covers new and evolving opportunities for the real estate investor, delivered weekly to your inbox.Subscribe here to get access today.Builders have been buying down mortgage rates to help get buyers in the door, which has cut into their margins some, but not as much as price cuts.”Should the public builders supplement mortgage rate buydowns with more outright price reductions they would likely experience a larger negative gross margin and EPS drag as they would be unli …
