It’s not just your imagination — if the housing market feels weird right now, that’s because it is.
From coast to coast, new construction is stalling, homes are sitting longer on the market, and sellers are realizing that the days of easy bidding wars might be behind them — at least for now.
New Home Construction Slows to a Crawl
The latest numbers are painting a clear picture: builders are pulling back.
In May, overall new-home construction dropped 4.6% compared to April.
That puts the pace of building at its slowest point since May 2020 — back when the world was in the thick of pandemic lockdowns.
Construction of single-family homes — the classic stand-alone house — barely budged, rising just 0.4%.
Meanwhile, apartment buildings and condos took a nosedive, with new starts plunging a stunning 30.4%.
Buyers Are Holding Back, Waiting — or Worrying
So what’s driving the slowdown? According to experts, it’s a mix of economic anxiety and strategic patience.
Many buyers are sitting on the sidelines, worried about a potential recession, or just hoping that prices will drop soon.
“Builders are already adjusting their outlooks,” said Realtor.com economist Danielle Hale, “and slowing the development pipeline — which could mean fewer new homes available next year.”
A Gloomy Forecast for Future Construction
The outlook isn’t any sunnier when you look at future plans.
Building permits — which signal how much construction is in the pipeline — fell by 2% from April to May.
That means less building is expected in the months ahead.
Some regions fared better than others. New-home construction actually rose by over 15% in the Western U.S., but the rest of the country wasn’t so lucky.
The biggest hit came in the Northeast, which saw a dramatic 40% drop.
Costs, Tariffs, and Uncertainty Weigh Down Builders
The slump isn’t just about buyer hesitation. Builders themselves are feeling squeezed from all directions — high mortgage rates, rising material costs, and continued labor shortages are making their job harder.
“Cracks are appearing in the housing market,” said Matthew Martin, senior economist at Oxford Economics.
“Builder sentiment is down, and higher tariffs are pushing costs up. Permits are falling, and home improvement spending is slowing.”
Even the recent easing of U.S.-China tariffs hasn’t lifted the mood among builders, who still feel uncertain about what’s ahead.
The Shift Toward a Buyer’s Market
While builders pull back, sellers are dealing with a different kind of problem: too many homes and not enough buyers.
Homes are sitting longer on the market, and that’s causing panic among sellers — many of whom are now slashing prices or offering perks to lure hesitant buyers.
According to Redfin economist Asad Khan, “The balance of power in the U.S. housing market has shifted toward buyers. But a lot of sellers haven’t quite accepted that yet.”
A Huge Gap Between Sellers and Buyers
Right now, the U.S. housing market has a serious imbalance.
There are around 2 million homes for sale — but only about 1.5 million active buyers.
That 500,000 gap is the largest mismatch between supply and demand ever recorded.
It’s a simple numbers game: too many homes, not enough interest.
That glut is pushing prices downward, even as the total market value of available homes hits record highs.
Record-Breaking Value, But Not Enough Bidders
Despite the cooling momentum, the total value of homes for sale in the U.S. just hit an eye-popping $698 billion — a 20.3% jump from this time last year.
But with so few buyers actually making offers, that money’s just sitting there, unclaimed.
“The problem is oversupply,” said Redfin’s chief economist Daryl Fairweather.
“There are nearly half a million more sellers than buyers. If sellers want to move their homes, they’re going to have to lower their prices.”
Sellers Begin to Cut Prices in Response
The reality is starting to hit home — quite literally — for many property owners.
Whether it’s regular homeowners or large-scale builders, many are being forced to bite the bullet and cut their asking prices.
Some are even offering concessions like mortgage rate buy-downs or home upgrades to sweeten the deal.
Danielle Hale summed it up: “Builders are operating in a very challenging environment — and it showed in the May data.”
What’s Next for the Market?
With fewer permits being filed, builders hitting pause, and buyers gaining leverage, the U.S. housing market is undergoing a quiet but significant shift.
The days of frenzied bidding and record-high home prices may be cooling off, at least for now.
In the months ahead, the biggest question will be how long this buyer’s advantage lasts — and whether sellers are truly ready to meet the moment.