Rebel Capitalist News Homebuilders Just Went Into Crisis Mode...What Does It Mean For Prices?
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Sep 25, 2025 The housing market is in turmoil, with Lennar facing a staggering 49% EPS drop. Surprisingly, new home sales spiked to 800,000, though this surge may be misleading. Builders are cutting prices and boosting incentives, but these tactics could hurt their margins. George reveals that many builders are slashing prices significantly, impacting used-home values. He predicts that discounts in new homes will drive down overall real estate prices in the coming years, cautioning buyers about potential future payment shocks.
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Sales Surge Masked By Price Cuts
- The headline jump in new-home sales can mask weakening fundamentals when driven by incentives and price cuts.
- George Gammon argues that volume bought with discounts signals stress, not strength, in housing.
Real Examples From Lennar's Listings
- George Gammon walks Lennar's site and finds many listings showing large nominal reductions.
- He reads examples of $30k–$100k cuts and calculates percent drops as high as ~26% to illustrate the trend.
New Homes Cheaper Than Existing Homes
- New construction prices have fallen below existing-home prices in many markets, which is unusual.
- Gammon says this signals owner-occupant sellers may be out of touch with current demand and will have to cut prices too.