January 2025 Month In Review

Blog posted On February 12, 2025

By Contributing Author Anthony Grasst, VP National Builder Division

This Month’s Key Takeaways

• Buyers are payment-focused, not price-focused. According to a recent report from the Mortgage Bankers Association (MBA), mortgage affordability remains the top concern for buyers, with 78% citing monthly payments as their primary hesitation.
• Financing incentives must align with buyer needs. A National Association of Realtors (NAR) survey found that 62% of first-time buyers used some form of financial assistance to make homeownership viable in Q4 2024.
• Sales teams need better conversations about affordability. Data from Fannie Mae’s latest housing sentiment survey indicates that 81% of buyers believe it's a bad time to buy due to high costs, meaning the ability to communicate affordability solutions effectively is more critical than ever.

Market Snapshot: Mortgage Rates & Economic Trends

Rates Remain High—Buyers Feel the Pressure

According to Freddie Mac, 30-year mortgage rates have stabilized around 6.9% - 7.1%, sustaining affordability challenges despite slight inflation cooling. The Federal Reserve has signaled that rate cuts may not come until mid-2025, reinforcing the need for financing solutions to support homebuyers.

• Buyers aren’t waiting for price drops—they’re payment-shopping. Zillow reports that 72% of active homebuyers are more concerned with monthly affordability than overall home prices.
• Wages aren’t keeping pace with inflation. A recent Bureau of Labor Statistics (BLS) report highlights that real wage growth remains sluggish at 2.4%, making mortgage affordability a growing concern.
• Builder confidence stabilizes. Despite affordability challenges, the NAHB Housing Market Index shows a steady 52-point reading, signaling that builders remain cautiously optimistic amid persistent demand for new homes.

Builders who customize financing strategies rather than relying on one-size-fits-all incentives will be best positioned to drive engagement and sales.

Buyer Behavior: What’s Driving or Stalling Demand?

Cash Flow Over Cost: What’s Really Holding Buyers Back?

• It’s not about the rate—it’s about the monthly payment. Redfin reports that buyers today are more likely than ever to factor in utility costs, insurance, and HOA fees to assess total housing affordability.
• First-time buyers are still in the market but need financing support. The latest NAR study reveals that 44% of first-time buyers used a rate buydown or closing cost assistance to secure a mortgage.
• Resale inventory is still too low. According to Realtor.com, active listings remain 30% below pre-pandemic levels, driving more buyers toward new homes where financing incentives improve affordability.
• Psychological hesitancy is real. A Fannie Mae housing sentiment survey found that 68% of potential buyers fear overextending their finances, making affordability conversations essential.

Sales teams must be prepared to reframe the affordability conversation and offer financing solutions that ease monthly payment concerns.

Builder Sentiment & Sales Trends

• Incentives remain a major sales driver. Builder rate buydowns continue to be the most effective strategy, with the Mortgage Bankers Association reporting that 55% of new-home purchases in December 2024 involved a builder-provided financing incentive.
• Understanding buyer financing preferences is critical. Not all buyers benefit from the same incentives. A John Burns Real Estate Consulting report shows that buyers who receive tailored financing offers are 40% more likely to complete a purchase.
• Digital engagement is key. According to a Zillow marketing report, builders who incorporate interactive financing calculators on their websites see a 24% higher conversion rate.

Sales training must focus on financing solutions. The ability to explain payment savings and affordability strategies is what separates top-performing sales teams.

Actionable Strategies for Builders & Sales Teams

• Refine Your Financing Message – Help buyers understand how builder-offered incentives lower their monthly payments, not just their interest rate.
• Match Incentives to Buyer Financing Preferences – Not all buyers need the same solution. Identify whether they need rate buydowns, closing cost assistance, or alternative financing options.
• Educate Buyers on the Cost of Waiting – Waiting for lower rates can mean missing out on home appreciation. Realtor.com projects home prices to rise 4.1% in 2025, reinforcing the importance of acting now.
• Lean into Digital Marketing – Use online calculators, financing breakdowns, and transparent messaging to make affordability clearer and more actionable.
• Leverage First-Time Buyer Programs – Programs like crowd-sourced down payments and builder-sponsored rate buydowns remain key to converting hesitant buyers.
• Train Sales Teams to Overcome Buyer Hesitation – Objections aren’t just financial; they’re emotional. Equip sales teams with the right communication tools to address buyer fears.

B.A.R. Facts: Key Data Points

• Buyers now need to earn 27% more than the median income to afford a typical home. Monthly payments feel unmanageable, increasing market hesitation. (Source: NAR)
• 30-year mortgage rates are holding around 7%. This continues to pressure affordability despite cooling inflation. (Source: Freddie Mac)
• Home prices remain resilient, with annual appreciation at 4.3%. Buyers waiting for price drops may be miscalculating the market. (Source: Case-Shiller Index)
• Resale inventory is down 30% from pre-pandemic levels. New homes remain a larger share of available inventory, currently making up 35% of all transactions. (Source: Realtor.com)
• Builder incentives continue to drive conversions. Rate buydowns and closing cost assistance are the most effective tools for affordability. (Source: MBA)

The market won’t change overnight—but your strategy can. Winning in 2025 means showing buyers how they can afford a home today, not just waiting for rates to drop. Builders who refine their financing strategy and train sales teams on affordability solutions will continue moving inventory.