Uncertainty took the driver’s seat in March, but homebuilders aren’t standing still. Inventory is up, prices are softening, and buyers are treading carefully—all while input costs and macroeconomic noise create friction across the pipeline. In this landscape, the builders who adapt quickly and stay dialed into demand signals may have the edge.
Housing Market Signals a Shift Buyers Can’t Ignore
March brought a modest but meaningful shift in housing market dynamics that homebuilders are watching closely. Active listings rose by 28.5% year-over-year by mid-March, according to Realtor.com, while new listings posted their tenth straight week of gains, up 10.4% annually. Homes are also sitting on the market longer, with average days on market rising by four compared to a year ago—signaling slightly softer demand but also more breathing room for buyers.
Price growth, meanwhile, is showing signs of moderation. Home prices rose 4% year-over-year in January, according to the latest S&P CoreLogic Case-Shiller Index—reflecting a still-solid market, though momentum is clearly slowing, especially in once-hot Sun Belt metros.
Affordability continues to loom large. Renters now put their odds of ever owning a home at just 34%—the lowest level in over a decade, according to a March survey from the New York Fed.
“The market hasn’t vanished—it’s just more selective,” said Manus Clancy, head of Data Strategy at LightBox. “Homebuilders have to meet today’s buyer exactly where they are: financially stretched, patient, and unwilling to compromise.”
Starts Rise but Forward Momentum Feels Fragile
Those shifting market signals are now feeding directly into builder behavior. February’s housing starts provided a glimmer of optimism, which grew by 11.2% to a seasonally adjusted annual rate of 1.501 million units. This uptick was observed across both single-family and multifamily segments, with single-family starts climbing 11.4% to 1.108 million units.
Still, there’s reason to temper enthusiasm. Building permits—a forward-looking indicator—dipped by 1.2% to 1.456 million units during the same period, suggesting potential caution among builders regarding future projects.
And sentiment is clearly softening. The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index fell to 39 in March—the lowest in seven months. Tariff concerns, rising construction costs, and persistent economic uncertainty are all weighing on builders. New tariffs alone are adding roughly $9,200 in cost per home, according to NAHB.
Multifamily Starts Hold Steady Despite Economic Crosscurrents
The multifamily sector continues to chart its own path through the broader economic noise. Multifamily housing starts are expected to reach 349,000 units this year, according to Fannie Mae’s March 2025 forecast—a modest increase from prior estimates, and a signal of cautious optimism despite concerns over slower GDP growth.
Developers are still contending with nearly one million units already under construction and a deceleration in rent growth, which may weigh on near-term enthusiasm. Construction starts have slowed and completions are expected to taper later this year, putting pressure on the supply pipeline. As one industry report put it, multifamily is “walking a tightrope” between supply and demand.
Still, longer-term fundamentals remain strong. Demand for rental housing continues to support development, especially in fast-growing Sun Belt and Mountain metros. More multifamily units will be delivered in 2025 than in any year since the 1970s projects CBRE—a reminder that developers are still leaning into demographic shifts and long-term renter demand.
New Home Sales Highlight Modest Gains Amidst Caution
Sales of newly built homes edged up 1.8% in February to an annual pace of 676,000 units, according to the Commerce Department. The gain was largely driven by a surge in the Midwest, but economists caution against reading too much into one month’s data. Pantheon Macroeconomics’ Oliver Allen called the series too volatile and frequently revised to draw firm conclusions, noting that the broader trend appears “flat to falling.”
Builders, sensing this caution, are responding with aggressive incentives. NAHB’s March sentiment survey showed 29% of builders cutting prices to move inventory—up from 26% in February.
How Leading Builders Are Responding in Real Time
Major U.S. homebuilders are implementing various strategies to stimulate buyer interest and maintain sales momentum.
Lennar Corporation posted Q1 2025 revenue of $7.3 billion and earnings of $2.57 per share, slightly ahead of expectations. The company delivered over 16,200 homes—a 15% increase year-over-year—and reported a 28% jump in new orders. Yet Lennar told investors the spring selling season began on a soft note, with buyers increasingly cautious. In response, the company raised incentives to roughly 13% of the final sales price—up from the typical 5% to 6%—equating to about $52,000 on a $400,000 home. Co-CEO Stuart Miller called these incentives “outsized,” but necessary.
KB Home is also leaning on incentives and pricing adjustments. The company reported Q1 2025 revenue of $1.39 billion and earnings of $1.49 per share, down from the same period last year. Deliveries fell 5% to 2,866 homes. CEO Jeffrey Mezger pointed to affordability and geopolitical uncertainty as major concerns for buyers, leading the company to lower its full-year average selling price guidance and expand mortgage rate buydowns.
D.R. Horton, the country’s largest homebuilder, reported stronger-than-expected Q1 earnings of $2.61 per share on $7.61 billion in revenue. The company delivered 19,340 homes and continues to lean heavily on affordability-driven offerings, including smaller floorplans and rate buydowns, to reach more budget-sensitive buyers. Executives noted strong underlying demand, especially in markets with constrained resale inventory.
Spec Homes Pile Up as Builders Recalibrate
One emerging risk? Spec homes—properties built without a buyer in place—are piling up. While these quick-move-in homes surged during the pandemic, many are now sitting unsold. Builders like Toll Brothers and PulteGroup are responding by slowing starts, particularly in markets with oversupply. If the trend accelerates, it could suppress future inventory growth and drag on local construction economies.
What Comes Next May Matter More Than What Just Happened
As Q2 begins, the field is shifting. Builders face pressure on all sides: cautious buyers, rising costs, policy risk, and uneven macro signals. But this moment is as much about positioning as it is about performance.
The buzz word may be uncertainty, but the real question for Q2 is this: Who has the conviction to move forward, and who’s stuck waiting for the Fed, the labor market, or the next press conference to set the tone? Watch for continued segmentation of product, smart land strategies, and signs of deal flow resilience in what remains one of the most complex homebuilding environments in recent memory.
“Builders who wait for perfect clarity will miss the window,” emphasized Clancy. “In a market like this, it’s not about timing the peak—it’s about having the strategy and capital to move when others pause.”
For more insights on homebuilder data and trends, subscribe to Insights and the CRE Weekly Digest Podcast for regular updates and real-time data.
Subscribe To Insights
Be the first to get the latest news, updates and insights from LightBox.
