June 2025 Real Estate Update: Boston, South Shore & Cape Cod Builder Sentiment Drops as Mortgage Rates Remain High

Source: CNBC / NAHB

The U.S. housing market continues to face headwinds as high mortgage rates and economic uncertainty weigh heavily on homebuilders and buyers. In June 2025, builder sentiment dropped again, signaling continued challenges for both new construction and resale markets across the country — including here in Boston, the South Shore, and Cape Cod.

National Builder Confidence Declines in June 2025

According to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI), builder confidence fell 2 points in June to a reading of 32. Any reading below 50 indicates negative sentiment among builders. For comparison, the index was at 43 in June 2024, highlighting how much builder confidence has slipped over the past year.

This is one of the lowest readings for the index since 2012, only surpassed during two other periods: April 2020, at the onset of the pandemic, and December 2022, when mortgage rates surged off historic lows.

Breaking Down the Builder Sentiment Index

• Current sales conditions: 35 (-2 points)

• Sales expectations for the next six months: 40 (-2 points)

• Buyer traffic: 21 (-2 points) — the lowest since late 2023

As NAHB Chairman Buddy Hughes explains, “Buyers are increasingly moving to the sidelines due to elevated mortgage rates and tariff and economic uncertainty. To help address affordability concerns and bring hesitant buyers off the fence, a growing number of builders are moving to cut prices.”

In June 2025, 37% of builders reported cutting prices to attract buyers — the highest percentage since the NAHB began tracking this metric. The average price reduction remains around 5%, consistent with recent trends.

Rising Inventory, Slowing Price Growth & Lower Housing Starts

According to Robert Dietz, NAHB Chief Economist, “Rising inventory levels and prospective home buyers who are on hold waiting for affordability conditions to improve are resulting in weakening price growth in most markets and generating price declines for resales in a growing number of markets.”

In response to current conditions, NAHB is forecasting a decline in single-family housing starts for 2025, adding further pressure to the housing market across the country.

Lennar, one of the nation’s largest homebuilders, recently reported that its second-quarter average home price dropped nearly 9% compared to the same time in 2024. New orders and delivery guidance also came in below analyst expectations. As Lennar co-CEO Stuart Miller stated: “We drove volume with starts while incentivizing sales to enable affordability and help consumers to purchase homes.”

South & West Facing the Steepest Declines

Regionally, the NAHB data shows that builder sentiment has declined most sharply in the South and West — two of the most active new construction markets in the U.S. Rising inventory, affordability challenges, and ongoing economic uncertainty are contributing to the pullback.

Local Update: Boston, South Shore & Cape Cod Real Estate Trends Mid-2025

Boston Multifamily Market Slowing

Here in Boston, the slowdown is becoming more evident, particularly in the multifamily sector. Inventory levels are building and many investors are becoming more cautious. With higher borrowing costs and elevated holding expenses, some properties are sitting longer on the market, and sellers are adjusting pricing to meet buyers where they are.

South Shore & Cape Cod: Selective New Construction Still Active

In contrast, South Shore and Cape Cod markets are still seeing activity, especially in single-family new construction and flips. However, these projects are being evaluated on a much more selective, case-by-case basis. Builders are closely watching land costs, construction expenses, resale values, and projected profit margins before moving forward.

While well-positioned projects in towns like Hingham, Cohasset, Scituate, Norwell, Marshfield, and Plymouth are still breaking ground, others may be delayed or put on hold depending on profitability and market demand.

What This Means for Buyers & Sellers

• For buyers: Some price softening, builder incentives, and increased inventory may create new opportunities — but elevated mortgage rates remain a major hurdle for many.

• For sellers and builders: Pricing strategy and timing are more important than ever. Understanding local market dynamics — whether in Boston proper or along the South Shore and Cape — is key to navigating today's market.

The Bottom Line

The combination of high mortgage rates, shifting builder sentiment, and increasing inventory levels is creating a more cautious and competitive market in mid-2025. Whether you’re looking to buy, sell, build, or invest in Boston real estate, or the South Shore and Cape Cod housing markets, it’s more important than ever to work with a local expert who understands these rapidly changing conditions.

If you have questions or want to discuss how today’s market impacts your goals, feel free to contact us anytime.