Builders have the lots and the permits. They are not pouring the foundations.

Builders are pulling permits and not breaking ground. The gap between single-family permits issued and starts recorded has widened for five consecutive months and is now at its widest in eleven years.

A permit costs relatively little and preserves optionality. A start commits capital, materials and a crew. When builders pull permits without starting, they are keeping the option open and declining to exercise it.

What builders say is stopping them

Industry surveys point to one answer: buyer traffic. The traffic component of the main builder confidence index is at its weakest reading since 2022, well below the components measuring current sales and expectations.

Financing is not the constraint this cycle. Construction loan availability has tightened only modestly, and the large publicly traded builders are largely funding from cash flow. Labor is tight but no tighter than last year.

We have the lots. We have the permits. What we do not have is people walking into the sales office on a Saturday.— A regional builder in a fast-growing metro

Incentives instead of price cuts

Rather than cut list prices, builders are discounting through incentives that now average about 6 percent of price — mostly permanent rate buydowns, sometimes closing costs or finished options.

The preference is deliberate. A list price cut reprices every unsold home in the community and annoys everyone who bought last quarter. An incentive is negotiated per buyer and leaves the comparable sales record intact.

• Permits vs starts: widest gap in eleven years, widening for five months
• Builder traffic index: weakest since 2022
• Incentives: about 6% of price on average, mostly rate buydowns
• Financing: construction credit only modestly tighter; large builders funding from cash flow

For buyers the practical consequence is that the advertised price of a new home understates what is available. For anyone reading the market from published prices, it means the recorded data is smoother than the underlying reality — a distortion that shows up in appraisals about two quarters later.