Home Builders Are Cutting Prices — But Buyers Still Can’t Afford Homes

Home builders are cutting prices and offering incentives, but buyers are still struggling to get into the housing market. New home sales fell to a 607,000 annual pace in July, while housing inventory jumped to 9.6 months of supply — the highest level since January. Builders are responding with rate buy-downs, closing-cost assistance and price cuts averaging about 6%. PhD economist Orphe Divounguy explains why the housing market is increasingly split into winners and losers, with luxury homes holding up while the middle of the market — roughly $500,000 to $800,000 — remains stuck. Mortgage rates around 6.7% are making it difficult for buyers to enter the market, while builders in the South and Sun Belt face growing inventories after years of heavy construction. Meanwhile, markets in the Midwest and Northeast continue to face a shortage of housing. Everyday Economics is hosted by Chris Krug and PhD economist Orphe Divounguy and is brought to you by The Center Square. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.