New home traffic was muted in October, driven by elevated mortgage rates. Still, sales and cancelations are held in a seasonally normal range thanks to incentives.

Most builders note that their 2025 start targets will remain unchanged even if rates remain elevated and resale inventory continues to rise. Florida’s recent hurricanes have impacted some builders and caused supply chain worries.

Mortgage rates remain elevated at 6.6% from 6.2% on October 1, per Mortgage Daily News.

Builders report muted traffic halfway through October. Mortgage rates ticked up in the first half of October, leaving many potential buyers confused and disappointed. Despite this, many hold out in anticipation of further cuts. The robust October jobs report helped nudge rates higher, but most consumers expect declines in 2025.

•  “Traffic is on pace for the season. Conversions are slow as buyers do not have any urgency, and there are too many headwinds for them to be decisive.” - Cleveland, OH.

• “Traffic quality is good, but volume is trending lower than the prior month at this time.” - Phoenix, AZ.

• “Decent traffic but muted buyer urgency. Not terrible, but we’ve moved from no-brainer [sales] to having to work for sales and buyers not biting on the lesser quality home sites.” - Austin, TX.

• “Typical for October; quality is good, overall traffic lower for a year.” - Atlanta, GA.

SALES AND CANCELATIONS

Builders report seasonally normal sales and cancelations.

Many builders indicate their sales and cancelations fall within seasonal expectations, though some Southeast and Florida builders fell short after 2 major hurricanes disrupted operations.

“Sales have followed suit with our traffic. They are still active. Not overwhelming and not slow. They are just where we would anticipate them to be in a positive way.” - Philadelphia, PA.

• “Sales in October have been consistent with previous Octobers. We’ve had less than 2% of our sales cancel.” - Houston, TX.

• “[We are] on plan and on track with a typical October.” - Washington, DC.

• “Sales are slow due to traffic conversion. Cancelations are below average. Sales are a little slow compared to a typical October.” - Charlotte, NC.

• “Sales and cancelations are in line with typical October.” - Atlanta, GA.

• “Sales and cancelations are] tracking similar to September. Steady.” - Chicago, IL.

INCENTIVES

Incentives continue to drive sales.

Closing costs, rate buydowns, and other incentives continue to drive sales, though some builders report fewer buydowns in October.

• “With rates currently being much lower than the summer months, we are not utilizing buydowns to help sell. However, cash toward closing costs is still the preferred incentive. Customers tend to use this cash toward achieving lower rates after the point of sale (provided the value is there).” - Baltimore, MD.

• “Without a very aggressive buydown, there is little chance to maintain pace or momentum. Incentives toward closing costs and interest rates are predominant.” - Phoenix, AZ.

• “Standing inventory needs incentives. Depending on the buyer, it’s a buydown, added features, or a cash discount.” - Cleveland, OH.

• “Sales are reliant on rate buydown incentives.” - Raleigh-Durham, NC.

STARTS

Most builders will not change their 2025 start targets.

Few builders indicate they will change their 2025 start targets if rates remain above 6% and resale inventory expands approaching the spring selling season.

• 83% of builders report that they will not change their 2025 starts budget.

• 17% indicate that they will lower their start target.

Most Northeast builders state they will not change their start forecast, noting sales still do not rely on incentives and many metros continue to have notably low supply.

• “No incentives required. The low resale inventory is driving the demand for our sales.” - Philadelphia, PA.

• “We have not offered any incentives for built-to-order. We have been discounting options on [quick move-ins].” - Boston, MA.

• “We do not offer incentives” - Washington, DC.