America’s housing market is flashing a fresh warning sign that prices are falling — and it’s coming from one of its biggest players.
Lennar, the second-largest US homebuilder, was forced to slash the cost of its houses by 10 percent in the final three months of 2025 as buyers disappeared.
It is a chilling signal of what may be coming next — not just for other new-builds, but for the roughly 130 million existing houses, apartments and condos across America.
Big builders like Lennar act as a canary in the coal mine for the wider housing market because they have no escape hatch.
Unlike most ordinary homeowners, who can pull a listing and wait if they don’t get their price, builders are stuck with new-builds that generate costs every day they sit unsold.
When buyers disappear, cutting prices becomes the only option. The typical Lennar home cost $386,000 in late-2025, compared to $430,000 during the same period in 2024.
The average existing home in the US is worth $360,000. If it’s value dropped by the same percentage, the typical American homeowner would see their biggest asset drop by in value by $36,000.
Lennar’s price cuts, revealed in its latest quarterly earnings, show how quickly pressure is building across the housing market.
Lennar, the second largest homebuilder in the United States, cut the average cost of its houses by 10 percent in the final three months of 2025 (pictured: a Lennar home in Sacramento)
Lennar’s revenue from home sales dipped dramatically in comparison to last year as the builder was forced to slash prices (pictured: Lennar homes in Newark, California)
Stuart Miller, Lennar’s chairman and co-CEO
Despite selling more homes, the company’s revenue from home sales fell seven percent year-on-year to $8.9 billion in the final quarter, as lower prices more than offset higher volumes.
Lennar’s average selling price is now down 21 percent from its pandemic-era peak.
Stuart Miller, Lennar’s chairman and co-CEO, said it had also been forced to offer incentives, which typically mean things like free carpets or money towards deposits, on top of price cuts.
He said that because the market is still unpredictable, the company cannot be sure what will happen in 2026 but hopes to sell around 85,000 homes.
The stress is not confined to one builder.
For as far back as records go, new homes have almost always cost more to buy than existing properties.
This isn’t surprising — new-builds have all the latest features and appliances, and they come without the wear and tear of previously-owned properties.
However, over the summer that trend turned completely upside down.
For as far back as records go, new homes (like the ones pictured above in Rochester, New York) have almost always cost more to buy than existing properties
With existing houses, owners can take the property off the market if it does not sell (pictured: a property for sale in Forest Hills, New York)
In June, the median sales price of a new home was $407,200 — around $28,000 cheaper than that of existing homes, and a 6.5 percent discount, according to Realtor.com.
Experts have chalked up the reversal to classic supply and demand.
Construction companies became giddy during the pandemic — when demand for housing was through the roof, especially in sunny Southern boomtowns — and built slews of homes to satisfy buyers’ needs.
However, as the Covid boom slowed, it became clear that builders had added far more homes than there were people to buy them.
Building companies were forced to cut costs, which left brand new homes to be sold at far cheaper prices than older homes, foreshadowing a potential market crash.
De-listings also surged this year, indicating that if homeowners cannot sell their house for the price they desire, they are willing to take the property off the market and wait for a better time to sell.
