Homebuyer Market Insights

💥 New homes are now CHEAPER than resale homes 💥   This marks a significant inflection point in the housing market, reversing the historical trend where new construction commanded a premium—often as much as 20% more than existing properties. The shift, which began during the pandemic with a narrowing of the price spread, has fully materialized over the past three months.   While new home prices can be influenced by changes in product offerings or location, our Zonda data, builder survey, and NewHomeSource.com trends all confirm that real price cuts are also occurring in the new home space.   Beyond the raw data, several additional factors make new homes even more compelling for buyers: - Lower insurance premiums. New homes typically incur lower insurance costs compared to existing properties due to modern building codes and materials. - Reduced maintenance. New construction offers a maintenance-free or lower-maintenance lifestyle, saving homeowners time and money on immediate repairs and upgrades compared to the resale market. - Enhanced energy efficiency. New homes are often more energy-efficient than existing homes, leading to lower utility bills and a reduced overall cost of living. - Attractive builder incentives. Builders continue to offer incentives (e.g. buydowns or design credits), providing extra perks to buyers that can further offset costs. Zonda Sarah Bonnarens Alexander Edelman Tim Sullivan Bryan Glasshagel Evan F. #housing #realestate #newhomes

First-time homebuyers are getting older -- reaching a record high of 38 years old this year, according to new data from NAR. That means the "renting stage of life" is elongating, and that means a bigger demand funnel for apartments and single-family rentals. Obviously, high mortgage rates play a big role. But it's not the only factor. Even once rates eventually come down, I'd bet the median age of first-time homebuyers tracks above historic averages. Here's why: 1) Lack of for-sale home inventory putting upward pressure on prices. We've added new homeowners much faster than we've added for-sale homes over the last 8 years. That's an unfavorable supply/demand equation for first-time buyers. We don't build starter homes like we used to. What does get built tends to be located on the outskirts of town, and that serves a need, but not everyone wants to live there. Other well-priced options tend to be older homes in need of repair in less desirable neighborhoods. For a lot of folks, location and condition of the home will matter more than just finding something to buy; and for those households, many will choose to rent. 2) "Delayed adulthood." Long before mortgage rates shot upward, we've seen a gradual trend in Americans waiting longer to get married and have kids. The typical first-time married couple is late 20s (women) or 30+ (men). The typical mother having her first child is now in her late 20s. Both are up considerably not just since the Leave it to Beaver days, but even up over the last 10-20 years. Marriage and children are typically life stage factors driving households to purchase a home. Waiting longer for these life stage events elongates the renting stage of life. And some may even choose until their kids are of school age before looking to "settle down" in a neighborhood with good schools long term. 3) Increased quality and professionalization of rental housing. This is the most underrated factor. In the old days, we lived in rental housing because we had to for a stage of life. Even in the best options were typically in so-so locations with minimal amenities and came with the pains of having to wait in lines at a leasing office (apartments) or track down a passive manager (SFR) by phone. No more. Apartments are getting built in great neighborhoods with condo-quality amenities and finish-out. SFR now comes with a lot more bells and whistles, with more full-time active management available via apps etc. The "little things" add up. This doesn't mean all these would-be buyers will stay renters forever. I don't believe in the idea of a massive increase in the so-called "perma-renter" in a nation that highly incentivizes homeownership, with 2/3 of households homeowners. Our elected officials will find ways to make homebuying easier. But I do think, structurally, we're seeing a longer "renting stage of life" for all the reasons noted above -- and that's another demand tailwind for apartments and SFR. #renting #housing #homeownership

Housing activity is weak Housing activity continues to deteriorate. As inventories rise home prices have been deflating across the country. Many recent buyers assumed they’d be refinancing into lower rates by now. That has not happened and as a result, we’re seeing more homeowners put their homes up for sale. According to Zillow’s Home Value Index, prices have declined two percent at an annual rate over the last three months. Importantly, the declines appear to be most pronounced in the regions of the country that have contributed the most to real estate construction in recent years – Florida, Arizona, Texas, and California. As prices have come down, we’ve seen homebuilders begin to rationalize construction to sales activity. So far this year, building permits have declined 34 percent at an annual rate. Historically, the pace of decline seen over the last six months is consistent with weak conditions in the broader economy. There appears to be no activity in the pipeline for future construction. So far this year, new homes sold but not yet started are down 33.3 percent against the same period last year. That’s quite a bit more than the decline in single-family housing starts. Moreover, builders continue to report very weak buyer traffic. At this point, if you aren’t selling homes, you aren’t starting homes. 

Housing starts have plummeted to their lowest level since 2020, falling short of consensus expectations. The month-over-month decline is primarily due to a drop in the volatile multi-family groundbreaking. Compared to last month, starts have decreased by 10%, and they are down 4.6% from the same period last year. Single-family home starts were essentially flat in May compared to April but down 7.3% compared to last year. A decline in single-family building permits points to a weaker trend moving forward, with SF building permits declining 2.7% in May and down 6.4% compared to a year ago. Not entirely surprising, considering that builder sentiment in June reached its lowest level in 13 years, excluding April 2020 and December 2022. This growing pessimism was widespread across all HMI components. Optimism about single-family sales for the next six months dropped by two points, and current sales conditions also fell by two points, marking the lowest level since June 2012. Prospective buyer traffic decreased from 23 to 21. Despite the weak construction print, new home sales showed strength in April. What's going on? New home sales might offer a better deal for buyers than existing homes. The latest HMI survey revealed that 37% of builders reported cutting prices in June, the highest percentage since NAHB began tracking this figure monthly in 2022. Additionally, the use of sales incentives rose to 62% in June, up one percentage point from May. Historically, new homes have come with a price premium, but that gap has disappeared. In April, the median price of an existing home ($414,000) was actually higher than that of a median new home ($407,200). This is partly due to price cuts and builders constructing smaller, less expensive homes. New home sales made up the highest share of total sales since 2005 in April. Builders face higher financing costs, tariff uncertainty, softer demand from elevated rates, rising existing-home inventory in key markets like Texas and Florida, and higher inventories of their own. This mix is weighing on builder sentiment and likely to slow single-family construction. The headline housing starts number for May was dragged down by a 30% drop in the volatile multi-family sector. But smoothing the data shows multi-family permits and starts have been trending sideways, suggesting stabilization. Tailwinds for the MF market include a small relative backlog, growing apartment demand (as affordability constraints persist in the for-sale market), and continued growth in the prime renter-age population.

New-Home Sales Just Dropped to a Seven-Month Low New-home sales fell 13.7% in May - the steepest decline this year and the weakest pace since October. It’s another clear signal that demand is under stress, and that the housing market’s soft landing may be turning soft underfoot. For much of the past year, homebuilders have done what existing homeowners couldn’t: they kept inventory flowing. With owners locked into ultra-low mortgage rates and staying put, the new-home market became the only viable path to ownership for many buyers. Builders responded with aggressive incentives like mortgage rate buy-downs, free upgrades, closing cost coverage. And it worked . . . for a while because incentives kept the pipeline moving. But now, even with those perks, buyers are stepping back. The underlying affordability gap is simply too wide. Mortgage rates remain stuck around 7%. Insurance costs are rising. Household budgets are under pressure. The tools that once created urgency are losing their grip. When incentives stop working, it’s not just caution. It’s a signal that buyers are fundamentally rethinking what they can afford, or what feels worth the risk right now. That kind of behavioral shift doesn’t just affect homebuilders. It cascades through the entire consumer economy. Behind the scenes, supply is quietly building. Completed homes for sale rose to 119,000 in May which is the highest in nearly 16 years. Groundbreaking activity is slowing. Builders are pulling back. And yet, despite softer demand, the median sales price climbed 3% year-over-year to $426,600. That’s not inflation. That’s segmentation. Price gains aren’t market-wide they’re concentrated in the upper tiers, where buyers are less sensitive to rates and more resilient to volatility. Everyone else is sitting on the sidelines. For the Fed, this report won’t move the needle alone, but it adds to a mounting case that restrictive policy is weighing heavily on interest rate–sensitive sectors. Housing is often the first to turn. If it stays soft into the fall, it could reshape expectations about consumer strength heading into 2026. At Havas Edge, we track this data because when the psychology of the buyer shifts, so must the strategies of the marketer. #HousingMarketUpdate #ConsumerBehavior #MacroSignals

For the first time in recent memory, new homes are cheaper than old ones. The latest Census data pegs the median new-home price at $401,800, roughly $33,000 less than an existing home, which clocks in at $435,300, per the National Association of Realtors. Why? Builders are sitting on the largest pile of unsold finished homes in 16 years, thanks to high mortgage rates scaring off buyers. To move inventory, 66% of builders are dangling sweeteners like mortgage rate buydowns, closing credits, and free appliances, the highest incentive rate in five years. Investors are taking note, swapping fixer-uppers for turnkey rentals with warranties, lower upkeep (1% vs. up to 5% of value for older homes), and faster tenant fill-ups. The bottom line is that new construction isn't just cheaper upfront, it's often cheaper to own. With incentives, energy savings, and maintenance baked in, the math is increasingly favoring those new builds. For investors and would-be homeowners alike, the "used is cheaper" rule no longer applies in housing, at least for now.

Home listings are at their highest level since 2020, yet clients’ top hesitation is still “can’t find the right house” at “the right price”! Using #AI, we analyzed 2,949 advisor-client meetings to track why clients hesitate to buy. We compared February 2025 with August 2025 to see how the mix of reasons changed. 🔵 Key Findings 🔵 From February to August of this year, clients that expressed that... ▪️ “Prices are too high” rose from 5.9% to 10.4% (+76%). ▪️ They “can’t find the right house” climbed from 8.8% to 13.4% (+52%). ▪️ “Rates are too high” dropped from 7.4% to 3.0% (-59%). ▪️They are “worried about the economy” dropped from 7.4% to 1.5% (-80%) ✨ Major Takeaway ✨ In August, clients were 3.5x more likely to cite “prices” than “rates” when explaining why they are hesitant to buy a home. This is a major shift. Why did it happen? ▪️ February: Tariff headlines and macro volatility made clients skittish. The question was “is it safe to buy?” ▪️ August: With economic fear fading and rates stabilizing, the question shifted to “is there anything worth buying at my price?” Today’s hesitation is less about the market overall and more about fit and affordability. Even with more homes on the market than at any point in five years, clients still feel limited because the available options don’t line up with their budgets or preferences. For advisors, the job isn’t to forecast the next rate move, it’s to help clients navigate trade-offs and reset expectations in a market where choice doesn’t always feel like opportunity.

Why aren’t people buying homes in the U.S.? The housing market has been under pressure for over a year. In July, homebuilders slashed prices by 5% — the biggest drop in three years. The main reason? High interest rates. Here’s a simple example: 🏠 House 1 Price: $300,000 Interest: 6% Term: 30 years 🏠 House 2 Price: $285,000 (5% cheaper) Interest: 7% Term: 30 years Which house has the lower monthly payment? Surprisingly, House 1. Even though House 2 is 5% cheaper upfront, the higher interest rate by 1% makes the monthly payments more expensive over the life of the loan. This shows a key truth: Mortgage interest rates often matter more than the sticker price. Until rates drop, the market will stay sluggish — because affordability isn’t just about price, it’s about the cost of borrowing.

Buyer Sentiment Is Improving, But Affordability Remains a Challenge The latest National Housing Survey from Fannie Mae shows that buyer sentiment is improving. The Home Purchase Sentiment Index (HPSI) rose to its highest level since early 2022, indicating growing buyer confidence. However, affordability remains a significant issue, as the Census Bureau's New Residential Sales report shows a -9.4% year-over-year decline in new home sales, highlighting ongoing challenges for buyers. Renting vs. Buying Preferences Many consumers choose to rent because home prices remain high, with 64% saying they prefer to rent until prices come down. However, waiting may mean missing out on the opportunity to build equity, as home values are still appreciating in most markets. Buyers are struggling to decide whether to buy or rent, weighing short-term costs against long-term benefits. Making Homes More Affordable Affordability is still a major challenge, but smart financing options and buyer education can help: 🔹 Financing Solutions: Buying down the interest rate can make homes more affordable and easier to qualify for. A 1% rate reduction can result in lower monthly payments, similar to a 10% price cut. 🔹 Buyer Education: Help buyers understand the long-term benefits of purchasing, such as building equity, avoiding rising rent costs, and taking advantage of home value growth. The key is learning how to communicate effectively with buyers, using empathy, transparency, and clear explanations of financing options. #NewHomeSales #SalesTraining #RealEstateMarket #BuyerHesitancy