Source: NAHB
The main argument against the U.S. housing correction had always been the lack of enough housing. That notion, however, is changing. Supply is starting to come into the market again as builders lower their prices and offer incentives, while the playing field for existing sellers remains unwilling to cut prices.
Moreover, there is a significant change occurring in the market at present. Home builders are lowering their prices and providing various incentives to the consumers, while previously bought homes are having their prices remain rigid.
Statistics presented in July indicate that 37% of home builders are showing price reductions. The mean price reduction is 6%, while 63% of the builders are participating in several incentives including mortgage rate buy-down.
In the first quarter of 2026 the mean price of new homes is $403,200 compared to $404,600 for the previous homes, meaning that new homes are becoming less expensive compared to the older houses.
This poses a challenge to existing sellers, as buyers no longer care about the prices a home was purchased a couple of years ago, they care about the cheapest option at the moment.
If a builder offers a customer a new home that has a lower effective payment there will be no chances of sale for the house that has been built 20 years ago.
Sales of previously owned homes are very low. The statistics show that home purchases dropped by 1.7% annually to 4.06 million homes sold, 29% out of which were bought by buyers who were buying a home for the first time.
Although the housing market has some shortage of houses, it does not constitute a price barrier that will hold prices from falling.
Sources:
Sources: NAHB Builder Sentiment
Eye on Housing New vs. Existing Prices
Reuters Existing-Home Sales