New-home sales fell sharply in May, dropping to their lowest level in seven months as affordability challenges kept buyers on the sidelines.
According to CBS News, builders offered deep discounts and incentives, but higher mortgage rates and still-elevated home prices continued to deter would-be buyers.
With inventory increasing, many builders appear more willing to make deals — especially as they work to offload completed homes.
Why builders are feeling the pressure
Builders typically count on strong spring demand to clear inventory, but CBS News reports that new-home sales fell 13.7% in May, marking the lowest level since October 2024.
With mortgage rates hovering near 7% and prices still elevated, many buyers are staying on the sidelines.
Holding onto completed homes can create added costs for builders — such as taxes, maintenance, and financing. These carrying costs may increase the urgency to close deals.
How to spot and negotiate meaningful incentives
If you’re in the market, it’s worth asking what incentives a builder may be offering. CBS News reveals that many are using markdowns and deals to move unsold inventory.
Common incentives may include rate buydowns, closing cost assistance, or upgrades — strategies builders often use to attract buyers when demand is soft.
Cosmetic touches like accent walls or basic landscaping can often be added later at a lower cost. On the other hand, luxury upgrades might increase a home’s assessed value and lead to higher property taxes.
With many builders under pressure to offload completed homes, walking away from an unsatisfactory offer may give you more leverage — especially in a market where flexibility is increasing.
Should you buy now — or wait?
Trying to time the housing market perfectly is rarely successful. CBS News observes that while buyer demand has softened, home prices haven’t dropped significantly, and lower interest rates in the future could bring buyers back into the market quickly.
If you’re planning to buy within the next year, current builder incentives may offer more flexibility than usual. While deeper discounts are possible, waiting could also mean missing some of the deals available today.
Slower sales or unusually steep price cuts may signal broader challenges for a builder. While not always red flags, it’s important to research the builder’s reputation and financial stability before committing.
Where to find the best builder deals
Start online, but don’t stop there. While CBS News reports that many builders are offering incentives to move inventory, some of the most flexible deals may still emerge through in-person negotiations beyond what’s advertised online.
Ask if any end-of-month or quarter-end specials are available, as these periods often push builders to finalize deals. Some buyers also turn to local groups or community forums where agents and homeowners share insights on current builder promotions.
Watching which builders are slowing construction may reveal where they’re shifting focus or facing demand issues.
Not all deals are created equal
A discount that sounds unusually generous may deserve a closer look. A builder offering much steeper price cuts than others in the area could be experiencing financial difficulty or offering lower build quality.
According to CBS News, 37% of builders reported cutting home prices in June, with an average reduction of 5%.
While some builders are using price cuts and incentives to close deals, buyers should still do their due diligence — including checking builder reputation, licensing, and consumer reviews — before signing a contract.
Some incentives are tied to using specific lenders or may not apply to certain closing costs.
Also consider the broader community. A high number of unsold homes in the area could signal issues with demand, location, or buyer preferences — so it’s worth asking questions before moving forward.
When the market blinks, make your move wisely
Economists at Santander and Raymond James expect continued weakness in the housing market, which could influence builder activity in the months ahead.
While the current slowdown offers some flexibility, builders may scale back new construction — and a drop in mortgage rates could quickly revive competition. For now, buyers who are prepared may find more room to negotiate on new-home deals.
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