Single-Family Home Builders NAICS 236115

Jul 9, 2025 - First-Time Homebuyers Down by Half

• High home prices and mortgage rates have priced many would-be homebuyers out of the market, creating robust pent-up demand that’s unlikely to be realized in the near term, according to The Wall Street Journal. In 2024, there were about 1.1 million first-time buyers, compared to an annual average of about 2.1 million over the last 20 years, according to the National Association of Realtors (NAR). To afford a median-priced new home today, a buyer would need an income of $127,000 compared to $79,000 for the same home in 2021, according to Harvard’s Joint Center for Housing Studies. To attract younger, first-time buyers, large builders with finance arms have offered mortgage-rate buydowns and discounts, which eat into profits. Industry watchers suggest that many first-time buyers may remain stuck on the sidelines, absent a significant drop in mortgage rates or a recession that pushes down home values.
• New single-family home sales fell 13.7% month-over-month and were down 6.3% year-over-year in May 2025, according to the US Census Bureau. May’s total new home sales reached 623,000 units. According to Dow Jones estimates, Wall Street analysts had expected May sales to reach 695,000. In recent quarterly reports, some homebuilders said high interest rates and weaker consumer confidence weighed on demand. As sales of new homes remain soft, inventories of unsold homes are increasing. At the end of May, there were 507,000 new homes for sale, up 15% compared to May 2024. The number of unsold new homes in May was the highest since the summer of 2022, after the Federal Reserve began increasing interest rates.

• Home builder confidence in the single-family market dropped in June to the lowest level since December 2022 amid high mortgage rates, tariff concerns, and increased economic uncertainty, according to the National Association of Home Builders (NAHB). Home builder sentiment, as measured by the NAHB/Wells Fargo Housing Market Index (HMI), fell two points to 32 in June 2025. Any HMI reading over 50 indicates that more builders see conditions as good than poor. The HMI survey also showed that 37% of builders have reduced home prices to lure potential buyers off the sidelines, although the average price reduction of 5% has remained unchanged since November 2024.
• North American construction and engineering spending in 2025 for the single-family market is expected to grow by 1% after increasing an estimated 2% in 2024, according to FMI’s third-quarter 2025 North American Engineering and Construction Outlook. Mortgage rates are expected to remain in the 6% to 7% range through 2026, and stricter immigration policies and tariffs on construction materials are projected to increase construction costs. Home-price-to-income ratios are at all-time highs and are expected to rise further, exacerbating affordability issues.