T
he US housing market is showing signs of a slowdown, with rising home prices and high mortgage rates keeping buyers on the sidelines. Real estate analyst Nick Gerli notes that this situation is reminiscent of 2008, particularly for homebuilders in areas like Florida and Texas where inventory is piling up. To move their unsold properties, builders are offering incentives such as zero-down mortgages and rent-to-own options.

    In these regions, home prices are dropping due to a slowdown in demand, with some counties experiencing declines of over 8%. Gerli expects home prices in Florida to fall by 5% year-over-year throughout 2025. In contrast, the Northeast and Midwest still have tight supply and rising prices.

    The situation is concerning for the US market and economy as it suggests major cracks are forming. Other factors troubling homebuilders include the direction of the housing market this year and potential impacts from Trump's tariffs on construction costs. The National Association of Home Builders' Housing Market Index reported a decline in confidence among builders, citing fears about the impact of tariffs.

    Homebuilders are increasingly offering incentives to move their unsold inventory, with some companies reporting their biggest use of incentives in over a decade. This includes offering 13% of revenue in sale incentives on home deliveries. The situation is similar to the lead-up to the 2007 housing bubble, where builders were desperate to offload properties and offered big incentives.

    However, unlike in the years leading up to the housing crash, builders are still intent on continuing to build, with many starting new phases in communities despite struggling to sell existing homes. The distribution of homebuilders' activity across the country has also changed, with starts almost exclusively in the South and certain Mountain States.