New Housing For-Sale Builders NAICS 236117

May 23, 2025 - Single-Family Housing Starts Decline

• The number of building permits issued for single-family, privately-owned housing units decreased 5.1% in April 2025 compared to March and fell 6.2% year-over-year. Single-family housing starts dropped by 1.6% month-over-month and were down 12% compared to April 2024. Single-family housing completions declined 5.9% in April from the previous month and decreased 12.3% year-over-year. Housing starts in April were pressured by tariff-related economic uncertainty, high mortgage rates, and rising costs for building materials, according to the National Association of Home Builders (NAHB).
• US home builders are dangling more incentives to close deals amid a tepid spring home-buying season that is halfway over, according to The Wall Street Journal. Builders typically notch 40% of their annual sales during the spring, but mortgage rates that are stuck around 7% and a lack of affordability have reduced demand. Builders have increased incentives to bring buyers off the sidelines, including mortgage-rate buydowns, design upgrades, and price cuts. In the first two weeks of April, incentives offered by builders equaled 7.2% of the purchase price, up from 6.1% in January, according to data from John Burns Research & Consulting. Incentives are eating into builder profits during a season that usually sees few discounts, and prices tend to rise.

• The price gap between new and existing homes is narrowing, according to National Association of Home Builders analysis of US Census Bureau data. In the first quarter of 2025, the median price for a new home was $416,900, only $14,600 more than the median existing home price. In Q1, the median price for a new home declined 2.32% year-over-year; the median price for an existing home rose 3.38% over the same period. The average price difference between new and existing homes over the last five years is $26,700, and over 10 years it’s $66,000. The price gap between new and existing homes has been closing as tight inventories of existing homes have pushed up prices. At the same time, builders have reduced lot and home sizes and offered incentives to attract buyers.
• North American construction and engineering spending in the single-family residential sector in 2025 is expected to grow by 3% after increasing an estimated 7% in 2024, according to FMI’s second-quarter 2025 North American Engineering and Construction Outlook. Headwinds facing the industry include mortgage rates that are expected to remain between 6% and 7% through at least 2026, and tariff and immigration policies that could make homes costlier to build. Additionally, housing affordability is near a historic low as median home prices exceed 7.3 times the median household income. Builder inventories of finished homes are also much higher than historical norms. Single-family construction spending is forecast to rise by 3% in 2026, then gradually improve, increasing 4% in 2027, 5% in 2028, and 6% in 2029.