Let’s check in on the housing market this week. A new report from the National Association of Home Builders shows that a record 41 percent of builders are now cutting prices to bring buyers back into the market. That’s well above the roughly 30 percent average we’ve seen over the past three years.
What’s going on? Well, affordability continues to be a problem for many potential home buyers. And even with mortgage rates easing a bit, many households have remained stuck on the sidelines, so home builders are doing what they can to bring these buyers back into the market.
To be sure, most builders are still holding prices steady. But many are offering discounts and even relying on incentives like mortgage buydowns. Will it work? Time will tell.
But one thing is for sure, housing is a very important component of the economy—and vital to its health. Price cuts tend to occur when things are weak, not strong. So for investors, we’d say this is another sign that the broader economy is cooling around the edges, and a good reminder of the risks out there.
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