New Home Market Showing Signs of Thawing Out as Spring Approaches

After a brutally-cold winter across most of the country, both the weather and the housing market are beginning to show early signs of thawing out as spring approaches. However, there are many crosscurrents to consider as we analyze the new home market backdrop entering the pivotal selling season.

Policy Update: No Silver Bullet Likely
Housing policy has been a major topic of discussion in Washington over the past several months but the developments thus far have been more noise than substance. 
 
Earlier this year, headlines circulated about a potential rent-to-own program that could spur the construction of up to one million entry-level homes. The idea, dubbed “Trump Homes,” generated plenty of excitement initially, particularly among homebuilders that focus on first-time buyers. However, the proposal quickly ran into logistical questions and was ultimately dismissed by administration officials shortly after the story surfaced. 
 
Meanwhile, lawmakers have continued debating a broader package of housing legislation aimed at improving affordability, including changes to financing rules for manufactured housing. While the proposal contains a variety of smaller initiatives, it does not include some of the more aggressive measures that had been rumored earlier in the year. In addition, restrictions on investor purchases of new single-family homes could serve as an offset to housing start growth.
 
The bottom line is that while housing policy will likely remain a headline topic throughout the year and MBS purchases by the GSEs have resulted in compression in mortgage spreads, we do not expect any near-term policy “silver bullet” that meaningfully boosts demand during the upcoming spring selling season.
 
New Home Orders Gaining Momentum After a Slow Start to the Selling Season
On the demand front, the selling season got off to a somewhat uneven start. Severe winter weather across large parts of the country disrupted activity in January and early February, and several of our real-time market checks pointed to softer-than-typical sales trends during the first few weeks of February. Across key western markets, for example, absorption rates were running roughly 30-35% below typical seasonal levels during the first half of the month.
 
Encouragingly, activity has improved in recent weeks, with absorptions in those same western markets increasing for two consecutive weeks, suggesting that sales momentum is beginning to pick up as mortgage rates briefly dipped below 6%.
 
Our preliminary February homebuilding survey results tell a similar story. After the sluggish start to the month, orders accelerated toward the end of February, leaving total orders up roughly 15% sequentially for the month – right in line with the typical seasonal uplift we normally see this time of year.
 
Year over year, orders are estimated to be up about 10%, representing the strongest growth rate since late 2024 as comparisons continue to ease. While absorption rates per community remain below year-ago levels, growth in community counts across the industry is helping to support overall order volumes.
 
Pricing Showing Signs of Firming as Spec Inventory Is Slowly Absorbed
Pricing trends also appear to be stabilizing after a period of meaningful pressure over the past year. Builders spent much of 2025 and early 2026 relying on incentives to move through elevated levels of speculative inventory, particularly in markets with heavy supply.
 
More recently, however, there have been some early signs that conditions are beginning to stabilize. In our latest survey work, roughly 80-85% of builders reported holding net pricing flat during February, while only about 10-15% reduced prices. The share of builders cutting prices has declined meaningfully from the roughly 30% average seen over the past year.
 
Incentives are still widely used across the industry, but they also appear to be stabilizing. As builders gradually work through spec inventory and mortgage rates have edged lower, the pressure to aggressively discount homes appears to be easing.
 
Importantly, most builders remain disciplined with new construction starts, which should help keep inventory levels in check as the year progresses. If sales continue to improve during the spring, that combination of better demand and tighter supply could allow builders to regain modest pricing power.
 
Macro Backdrop Remains Tenuous Heading Into the Most Important Months of the Year for Housing
Even with the recent improvement in demand trends, the macro backdrop remains uncertain as the housing market heads into its most important stretch of the year.
 
Spring typically represents the strongest period for new home sales, with the March through June window accounting for nearly 40% of annual orders. This year, however, there are several macro-level question marks that could influence buyer confidence and overall housing activity.
 
Geopolitical tensions, including the ongoing conflict involving Iran, have contributed to a more volatile global environment and renewed inflation risks, while domestic political uncertainty and broader economic concerns continue to weigh on consumer sentiment.
 
For now, the housing market appears to be following a fairly typical seasonal playbook: a slow winter period followed by gradually improving demand as the weather warms and buyers re-engage. The key question is whether that early momentum can continue through the spring selling season.