Builders are facing challenges at the beginning of the spring selling season due to high mortgage rates and uncertainty surrounding tariffs. KB Home reported a 17% decrease in net orders in the first quarter of the fiscal year, along with a revision of its expected average selling price range for 2025. Despite a generally favorable housing market outlook, demand during the start of the spring selling season has been weaker than in previous years.

The CEO of KB Home, Jeffrey Mezger, acknowledged the subdued demand among buyers at the beginning of the peak homebuying and selling season, which traditionally kicks off around Super Bowl weekend. The company usually experiences an increase in net orders in late January and early February, but this year, that trend was absent. As a result, KB Home adjusted its 2025 housing sales guidance downwards.

While new single-family home sales showed a slight uptick in February, driven by favorable weather conditions and declining mortgage rates, the sustainability of this trend remains uncertain. Industry experts believe that buyers are present in the market, but builders need to find ways to enhance affordability and address the challenges posed by high mortgage rates.

KB Home is not the only builder facing difficulties. Lennar, the second-largest homebuilder, also reported modest growth in net new orders but projected lower-than-expected quarterly orders due to the challenging housing market conditions. Lennar anticipates reduced new orders for the upcoming quarter and has adjusted its average sales price to account for market dynamics.