Blog Post

Will New Home Prices Go Down in 2027? A Homebuilder’s Perspective

By Tim Rice Whitestone Homes

One of the questions I hear from people considering a new home is whether they should buy now or wait for prices to come down.

I’ve been in the homebuilding business 41 years, and I can tell you that it’s a fair question. Nobody wants to buy a home today only to discover they could have purchased it for substantially less a year later.

But I think there’s something important that many buyers overlook.

The cost of building a new home isn’t going down just because people want home prices to come down.

And that’s the real issue.

What It Actually Costs to Build a Home

As a homebuilder in the San Antonio area, I see firsthand what goes into the cost of constructing a new home.

We have to purchase land, develop lots, install infrastructure, hire skilled subcontractors, purchase building materials, pay insurance, and meet an ever-growing list of construction requirements.

Almost none of those expenses are getting meaningfully cheaper.

Certainly, individual material prices fluctuate. Lumber is a good example. But when you look at the total cost of building a home, there simply aren’t many opportunities for dramatic reductions.

Labor is particularly important. Good electricians, plumbers, framers, masons, and other skilled tradespeople are essential to building a quality home. Their services are in demand, and their costs reflect that.

Land and development costs are another major factor. By the time a builder purchases property, completes engineering, installs utilities and streets, and prepares lots for construction, a substantial amount of money has already been invested before the first foundation is poured.

Those are real costs, and they ultimately have to be reflected in the price of a new home.

Can Home Prices Actually Fall?

Of course they can.

I’ve been in this business long enough to know that real estate markets don’t always move in one direction.

Economic downturns, excessive inventory, and other unexpected events can cause home prices to decline. Builders sometimes discount completed homes to reduce inventory, even if it means accepting smaller profits or, occasionally, a loss. So far I have only seen prices really drop once. It was in the late 80s and was mostly only in Texas. 

But there’s a big difference between a temporary market adjustment and a lasting reduction in construction costs.

If the market becomes weak enough, builders will eventually slow down or stop building homes that they can’t sell profitably.

And when construction slows, the supply of new homes can tighten.

That’s one reason I don’t believe buyers should count on a substantial, across-the-board decline in new home prices.

What About Mortgage Interest Rates?

This is another reason some buyers are waiting.

They hope interest rates will come down, making their monthly payments more affordable.

And that may happen.

But here’s what I would encourage buyers to consider: If mortgage rates fall significantly, many other buyers who have been sitting on the sidelines may decide it’s time to purchase.

More buyers competing for available homes can put upward pressure on prices.

So while you might benefit from a lower mortgage rate, you could end up paying more for the house itself.

There’s no guarantee that waiting will improve your overall financial position.

My Advice to Buyers

I would never encourage someone to purchase a home they can’t comfortably afford. Buying a home is a major financial decision, and it should be made carefully.

But I also wouldn’t recommend putting your life on hold waiting for a housing market collapse that may never come.

If you find a home you love, in a neighborhood you want to live in, and the numbers make sense for your family, I believe that’s a much better foundation for making a decision than trying to predict the market.

After all these years in homebuilding, I’ve learned that nobody consistently predicts interest rates, housing prices, or the economy with complete accuracy.

What I do know is what it costs to build a quality home today.

And unless something significant changes in the economy or the cost of construction, I see very little reason to expect new homes to suddenly become dramatically less expensive.

My advice? Buy the right home when it’s right for you, rather than waiting for the perfect market that may never arrive.