Single-Family Home Builders NAICS 236115

Dec 10, 2025 - Builder Mortgage Deals Can Leave Buyers Underwater

• Big home builders are luring buyers with bargain mortgages, but the deals often come with hidden risks, according to The Wall Street Journal. Some firms offer rates as low as 3.99% compared with more than 6% from traditional lenders. These deals, made possible through bulk forward commitments from lenders, allow builders to offer incentives far beyond typical seller concessions. While such promotions help more people enter the single-family market, they also inflate home prices, leaving many borrowers underwater soon after purchase. According to analysis by Reverse Engineering Finance, 27% of Lennar’s FHA loans originated between 2022 and 2024 are now underwater, and 18% of D.R. Horton’s are, compared with 10% at Quicken Loans. Builders prefer rate buydowns over price cuts to protect community values. With nearly two-thirds of FHA borrowers spending over 43% of pretax income on housing, experts warn that outright price reductions would better stabilize the market.
• Home builder confidence in the single-family market increased slightly in November, but remained in contraction territory amid sustained industry headwinds, according to the National Association of Home Builders (NAHB). Home builder sentiment, as measured by the NAHB/Wells Fargo Housing Market Index (HMI), rose one point to 38 in November 2025. Any HMI reading over 50 indicates that more builders see conditions as good than poor. Builders reported that the US government shutdown added to existing challenges, including tariff-related economic uncertainty and rising construction costs. The HMI survey also showed that 41% of builders reduced home prices in November, marking a record post-pandemic high. The average price reduction of 6% was unchanged from the previous month.

• President Trump’s tariffs and immigration crackdown are straining US homebuilders, raising costs and worsening labor shortages, according to The New York Times. Builders face higher prices for steel, copper, lumber and other materials, with tariffs adding up to $10,900 to the cost of a typical home, according to the National Association of Home Builders. Immigration enforcement has made workers fearful, delaying projects and shrinking crews. Construction added only 6,000 jobs through August, despite an Associated Builders and Contractors projection that nearly 500,000 more workers will be needed in 2026. Builders are slowing activity, cutting budgets and bracing for slower growth as high mortgage rates and weak demand are dragging down sales. Economists warn that even if interest rates fall, labor and material pressures could intensify.
• America’s largest homebuilders are struggling to sell new homes despite offering 4% mortgages and deep discounts, according to The Wall Street Journal. D.R. Horton and Lennar have slashed prices and added incentives, but demand remains weak, pushing unsold inventory to levels last seen in 2009. Builders are slowing construction, with D.R. Horton cutting starts by 21% year over year for the three month period through September. Regional gluts in Texas, Florida, Southern California and Washington, DC reflect rising resale competition, fewer foreign buyers, and economic uncertainty. Investor activity is at a 15-year low, with institutional buyers demanding steep discounts builders won’t meet. New homes, often in less desirable areas and aimed at first-time buyers, are harder to sell.