Builder confidence and housing starts plunged!?

The housing market is always evolving, and 2025 is shaping up to be a year of significant shifts. From builder confidence and affordability challenges to new tax proposals and shifting buyer trends, here’s what you need to know about the latest real estate developments.

Builder Confidence & Housing Starts: A Reality Check

Despite concerns, builder confidence hasn’t truly plunged—it’s just adjusting to ongoing affordability challenges, including mortgage rates, rising home prices, and insurance costs. The National Association of Home Builders (NAHB) confidence index dropped by 5 points in February, largely due to tariff uncertainties on Canadian lumber. However, post-tariff delay, confidence rebounded slightly.

What it Means for You: Builders may slow production slightly, but demand remains strong. If you’re considering new construction, now is the time to explore options before potential supply constraints impact pricing.

Retail Sales & Consumer Debt: A Shift in Spending?

After a strong December holiday season (+0.7% month-over-month), retail sales dropped by 0.9% in January, signaling possible consumer caution as credit card debt continues to rise. Could this be a turning point for the American consumer?

The Rising Cost of Home Insurance

Home insurance affordability has gone from a niche concern to a national issue. Some homeowners are even opting to go without insurance due to skyrocketing costs. Fed Chair Jerome Powell has warned that some areas may become uninsurable in the future.

Triangle Impact: While North Carolina hasn’t faced the insurance crises of states like Florida and California, rising costs are still a factor for homebuyers. Budgeting for insurance is more critical than ever.

Florida’s Property Tax Debate

Governor Ron DeSantis has floated the idea of eliminating property taxes, as Florida’s budget is primarily funded through sales taxes. However, local and municipal budgets could face significant challenges.

What to Watch: If Florida moves forward with this, could other states follow? How might this impact relocation trends?

Off-MLS Listings Sell for Less—But There’s a Catch

A Zillow analysis found that homes sold off-market averaged $5,000 less than those listed on the MLS, with some markets seeing losses up to $30,000. While “exclusive” listings sound appealing, they significantly reduce buyer exposure.

Why This Matters: Maximizing exposure typically leads to better offers. If you’re selling, consider the benefits of a full-market listing.

New Home Sales & Inventory Trends

Housing starts fell 10% month-over-month in January 2025, but this follows a 16% increase in December. With existing home inventory up 25% year-over-year, we may see a shift in demand from new construction to resale properties.

Cash Buyers Are Still in the Game

While cash sales dropped to 32.6% of all home purchases—the lowest in three years—it’s still a significant portion of the market. Nearly one-third of all homes were bought with cash, signaling that investors and affluent buyers remain active.

Mortgage Rates & NAR’s Forecast for 2025-2026

Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), predicts:

• 30-year mortgage rates to stay in the 6% range for 2025-2026

• Existing home sales growth of 7-12% in 2025 and 10-15% in 2026

• Home price appreciation of around 2% annually

What’s Next for Buyers & Sellers? With mortgage rates stabilizing and inventory growing, 2025 presents opportunities for both buyers and sellers. Whether you’re looking to purchase, sell, or invest, staying informed is key to making the right decisions.