Homebuilders Offer Clues on the U.S. Housing Market

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0:34Veronica Dagher:Hey, YMB listeners. I'm Anthony Bancey for The Wall Street Journal.

0:41Veronica Dagher:Today, we're sharing a special episode of What's News in Earnings. It's a show that occasionally pops up in our What's News feed. This episode looks at the U.S. housing market before the 2026 spring selling season begins next month. Take a listen, and if you like it, check out What's News wherever you listen to us.

1:11Hey, listeners.

1:13Veronica Dagher:I'm Veronica Dagger for The Wall Street Journal, and this is What's News in Earnings, our look at some of the biggest themes standing out this earnings season. The U.S. housing market is entering the 2026 spring selling season in an uneasy equilibrium. Mortgage rates have settled into a new normal, about 6 percent. But for many, the American dream feels further away than ever. The nation's biggest home builders are telling different stories about the housing market. This week, Toll Brothers reported a jump in profit fueled by luxury buyers. Meanwhile, the entry-level builder, D.R. Horton, is shrinking home sizes and piling on incentives just to keep first-time buyers in the game.

1:58Veronica Dagher:And Pulte Group is highlighting the country's growing geographic divide. Joining me to break down what all this means for the housing market is WSJ national housing reporter, Nicole Friedman.

2:14Veronica Dagher:Nicole, let's start with this geographic divide. Pulte Group is seeing a notable split. Demand in Florida was improving, but cooling for families in the West. How does what the company is saying reflect different housing trends across the country?

2:29Nicole Friedman:Yeah, so we have definitely seen different housing markets in different parts of the country. There's been a lot more competition and rising home prices in the Northeast and Midwest, where the inventory is still lower than normal. But in the South and West, we've seen much slower housing markets, even declining prices. And that's because there's been more supply of homes for sale in a lot of those markets. Also, as Pulte Group noted, in the West, there's been more concern about a slowdown in the tech sector, in white-collar job hiring. And a lot of people are just unwilling to make a big purchase, like buying a home, if they're not confident about their job security.

3:16Nicole Friedman:And then Florida is interesting because it's been one of the slowest markets in the country. We've seen a lot of inventory for sale in Florida, falling prices. And so now we're starting to hear from home builders and from local real estate agents that there's some pickup in demand in Florida. And so it's going to be important to watch this spring whether we're starting to see a turnaround in that market and if the lower prices there are starting to bring some buyers back.

3:47Veronica Dagher:So affordability is such an issue across the board. And builders are looking for ways to engineer through this affordability crisis. For example, D.R. Horton is shrinking floor plans to keep a lid on prices. And here's Pulte Group CEO Ryan Marshall on the company's latest earnings call on talks they've had with the Trump administration. There's a lot being talked about. As I know you can appreciate, it's hard because housing remains very, very local. And so, you know, I think the entire industry, us included, are going to continue to work with, you know, the administration to try and create more supply, which ultimately will impact affordability.

4:30Veronica Dagher:Nicole, how are homebuilders trying to tackle affordability?

4:33Nicole Friedman:So this is the major challenge for homebuilders is how to keep their homes affordable for buyers. And we're definitely seeing an investment in recent years in smaller homes, smaller floor plans that can kind of keep prices lower. Also, homebuilders have really leaned into incentives. They're often offering lower mortgage rates for homebuyers. So if you look at a big homebuilder's website, you can often see an advertisement for, you know, buy today at maybe a 5 % mortgage rate or even under 5%, which is lower than they could get if they bought an existing home. And so that's a big incentive. The latest survey from the National Association of Home Builders shows that two-thirds of home builders were offering incentives of some kind in February, and about a third of builders cut prices in February.

5:28Nicole Friedman:And this has become a big political topic that the administration is talking to home builders about. And so the builders are really eager right now to show that they are participating in this process and trying to collaborate with the administration.

5:46Veronica Dagher:Nicole, this sounds like some good news for home buyers. What else are you hearing about the spring selling season and how it's shaping up?

5:52Nicole Friedman:So the biggest thing going on right now heading into the spring selling season is that mortgage rates have come down and they're about 6 % right now. And so that can make a big difference for a buyer in terms of their monthly payment. Some builders have said in their recent earnings calls that they started to see more foot traffic in January. So that can be an early sign of buyer interest. but it's a little too soon to say whether that will translate into actually more home sales. There's still a lot of buyers who are priced out. And so there's still work that needs to be done in kind of improving their willingness to enter the market.

6:33Veronica Dagher:That was Wall Street Journal national housing reporter Nicole Friedman. Nicole, thanks for joining us.

6:39Nicole Friedman:Thank you for having me.

6:42Veronica Dagher:And that was What's News in Earnings. Today's show was produced by Pierre Bien-Aimé. with supervising producer Tali Arbel. Additional sound courtesy of S &P Global Market Intelligence. I'm Veronica Dagger. Have a great day.

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