A significant shift is underway in the U.S. housing market as a growing number of home sellers and builders are reducing prices and offering substantial incentives to attract buyers. This trend, driven by a slower sales pace, is creating new opportunities for prospective homeowners and putting pressure on sellers to adjust their expectations.
In February, more than a third of homebuilders reported cutting prices to stimulate sales, a strategy that is now rippling through the market for existing homes. This marks a notable change in dynamics, giving buyers more negotiating power than they have seen in recent years.
Key Takeaways
- Over a third of homebuilders (36%) cut prices in February, with the average reduction at 6%.
- In some cities like Austin, Texas, over 22% of home listings have had multiple price cuts.
- Despite price reductions, the national median home price remains elevated, and homeowner equity is still high.
- Buyers are benefiting from improved affordability as wage growth outpaces home price gains and mortgage rates have lowered.
Builders Take the Lead with Aggressive Incentives
The new construction sector is at the forefront of this market correction. Data reveals that 36% of builders reduced their prices in February, with an average price drop of 6%. This is the most significant use of price cuts by builders in recent memory.
Beyond direct price reductions, incentives have become a primary tool. A staggering 65% of builders offered various perks to close deals. These include assistance with closing costs, mortgage rate buydowns, and funds for design upgrades.
Some companies are combining multiple offers to create compelling packages. For instance, builders like Highland Homes have promoted deals offering up to 50% off design upgrades, valued at as much as $100,000, along with $10,000 toward closing costs. Others, such as David Weekley Homes, have advertised mortgage rates as low as 4.99% through their financing partners.
New Home Discounts by State
Some states are seeing an even higher rate of price reductions on newly built homes. As of late 2025, the states with the most significant share of discounted new homes included:
- Nevada: 24.8%
- Indiana: 23.3%
- South Carolina: 21.6%
- Minnesota: 21.6%
- North Carolina: 21.3%
Pressure Mounts on Existing Home Sellers
The aggressive tactics in the new-home market are directly impacting sellers of existing properties. To remain competitive, many are finding they must also lower their asking prices, sometimes repeatedly.
Nationally, about 18% of existing-home listings featured a price cut toward the end of last year. More telling is the frequency of these reductions. As of January, nearly 11% of all active listings had undergone at least three separate price cuts.
Real estate professionals caution against the perils of overpricing in the current climate. Kourtney Pulitzer, a real estate professional with Sotheby’s International Realty in Palm Beach, Florida, explained the risk.
"Your home is worth what someone else is willing to pay … but sometimes that doesn’t line up with what sellers think. If you’re not priced realistically, buyers assume you’re not being realistic—and they won’t even make an offer."
This sentiment highlights a critical mistake: pricing high with the hope of negotiating down often results in no negotiations at all. Sellers who misjudge the market may end up "chasing the market down" with successive price cuts rather than pricing strategically from the start.
Cities With the Most Frequent Price Reductions
Certain metropolitan areas are experiencing this trend more acutely than others. The following cities had the highest percentage of active listings with three or more price cuts as of January:
- Austin, Texas: 22.2%
- San Antonio, Texas: 22.0%
- Tampa, Florida: 20.8%
- Indianapolis, Indiana: 18.4%
- Jacksonville, Florida: 17.8%
- Dallas, Texas: 17.2%
- Orlando, Florida: 16.9%
- Portland, Oregon: 16.6%
- Phoenix, Arizona: 16.5%
- Denver, Colorado: 15.9%
The Broader Market Context
While the increase in price cuts is a significant development, it's important to view it within the larger economic picture. Most homeowners are not in a position of distress. In fact, many are still benefiting from substantial equity gains accumulated over the past several years.
Significant Equity Gains Remain
According to research from the National Association of REALTORS®, the typical homeowner has gained approximately $130,500 in housing wealth since January 2020. Even in Austin, a city leading the nation in price cuts, the average homeowner has seen their housing wealth grow by about $170,000 over the last five years.
Furthermore, national home values remain high. The median existing-home sales price in January reached $398,800, an all-time high for that month. While the number of metro areas seeing price gains has narrowed, the market is showing signs of moderation, not a widespread decline.
The market also shows no signs of widespread financial distress. Foreclosures and short sales are at historical lows, accounting for just 2% of sales in January, down from 3% a year prior. This indicates a stable foundation, unlike the conditions that preceded previous market downturns.
A Window of Opportunity for Buyers?
For prospective buyers, these shifts are creating a more favorable environment. According to Lawrence Yun, chief economist for the National Association of REALTORS®, "affordability conditions are improving."
The Housing Affordability Index has reached its most favorable level since March 2022. This improvement is attributed to two main factors: wage growth that has started to outpace home price increases and mortgage rates that have fallen from their recent peaks to the lowest levels in three years.
The combination of more motivated sellers, increasing inventory in some areas, and improved affordability metrics suggests that the coming months could provide a valuable window for buyers who have been waiting on the sidelines. The power dynamic appears to be slowly but surely shifting in their favor.
