A confluence of factors, including buyer hesitancy, elevated interest rates, and economic uncertainty, have contributed to a challenging and competitive housing market in 2025. These conditions led to a muted spring selling season and have continued to temper the housing market through the summer months.
Public home builders highlighted these market headwinds during recent earnings calls, and private builders are facing many of the same challenges are their larger, public peers. Saun Sullivan, CEO of DSLD Homes, says traffic is 5% softer than last year for the No. 24 company on the 2025 Builder 100, in large part due to consumer confidence and mortgage rates impacting demand.
Jay Brown, CEO of No. 16 David Weekley Homes, agrees affordability remains a top concern, though he notes the company is beginning to see some construction cost relief.
“The housing market in 2025 has been challenging and highly competitive, but we remain optimistic about the future of the industry,” Brown tells BUILDER. “Small- to mid-sized builders will need to continue finding ways to differentiate themselves from larger home builders that benefit in numerous ways from scale.”
Larger public builders have benefited from their ability to absorb the costs of offering sales incentives, include mortgage rate buydowns, to help solve the affordability equation for prospective buyers. A recent Zonda survey of division presidents indicates the share of projects with quick move-in incentives is above 70% across all product segments (entry-level, move-up, move-down, and high-end). The share is above 80% for both entry-level and move-up/move-down homes.
While not a cure-all for current demand challenges, private builders also noted the increased utilization of sales incentives to support prospective buyers and compete in the market.
Incentives, Price Concessions, and Sales Efforts
In the face of these conditions, many builders are doubling down on what they can control, including the quality of homes and the customer experience.
“From a sales standpoint, our focus remains on delivering consistent results regardless of market fluctuations,” Marla Telfair, national sales director at Drees Homes, No. 39 on the 2025 Builder 100, says. “We’re deeply committed to understanding our buyers, building meaningful relationships, and ensuring their needs are met throughout the home buying journey.”
Similarly, Brandon Jones, CEO of No. 46-ranked Davidson Homes, emphasizes the company’s agility in responding to changing buyer behavior and market signals.
“When a market is challenging like this, there is a real benefit that goes to small private builders that can adapt and pivot strategy to what is happening on the sales floor,” Jones says. “We are a very fast-moving private builder, so if we sense that buyers are becoming more rate-sensitive, we can turn the company to respond to the feedback from our customers. If we find they are concerned with included features or pricing, we can pivot rapidly to those things as well.”
Brown says the use of incentives by David Weekley vary by market but continue to play a large role in today’s housing market. The company has offered a range of incentives to buyers, including forward commitments, closing cost contributions, and home discounts. Brown notes forward commitments have been particularly effective in generating sales on move-in ready inventory.
Telfair says Drees Homes has introduced below-market fixed rate promotions, 2-1 buydowns, and a 1% discount off market rate incentive for build-to-order buyers.
“In addition to these financial offerings, several of our divisions have implemented market-specific incentives that are resonating well with buyers—such as complimentary finished basements,” Telfair notes.
Davidson Homes is employing a flexible approach where rate buydowns are utilized to incent rate sensitive buyers while design center incentives or pricing discounts are being utilized for other buyers.
“There are some buyer confidence issues that are plaguing the market right now,” Jones says. “What we are seeing is a correlation between people walking into our office and the sales volume two to three weeks later as a result. We do incentivize buyers to choose us over a competitor, but the bigger challenge is that there are just not as many buyers in the market to be had.”
Jones adds that a recovery in buyer confidence would likely lead to stronger traffic and improved sales conditions. Both Telfair and Brown believe incentives will continue to play a role in solving for affordability and stimulating the market, though both note the importance of remaining flexible and responsive to what is resonating most with prospective buyers.
