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Want more housing market stories from Lance Lamberts ResiClub in your inbox? Subscribe to the ResiClub newsletter. In a normal housing market environment, giant homebuilder PulteGroupwhich is worth $23 billionspends $18,000 to $21,000 on incentives on a $600,000 home sale. But with affordability strained and housing market softness spreading, the homebuilding giant is now shelling out closer to $52,200 per sale of a home of that value. Incentives for the second quarter were 8.7% of gross sales price, which is up from 6.3% last year, and on a sequential basis [quarter-over-quarter] up from 8.0%, Jim Ossowski, CFO of PulteGroup, said during the builders July 22 earnings call. Ever since mortgage rates spiked in mid-2022, which followed a historic run-up in U.S. home prices during the Pandemic Housing Boom, U.S. housing affordability has been strained. In housing markets where that affordability strain has manifested into spiked active inventory/months of supply and soft/falling home prices, giant homebuilders have leaned into doing bigger incentives, in particular, mortgage rate buydowns to pull in priced-out homebuyers and keep sales going. Of course, given the widespread housing market softeningmost acute over the past year in parts of the West, Southwest, and Southeastmany homebuilders, including PulteGroup, have further increased their incentive spending to prevent a deeper pullback in home sales. We have responded to these conditions by adjusting [net] sales prices where necessary and focusing sales incentives on closing cost incentives, especially mortgage interest rate buydowns, wrote PulteGroup in its earnings report published on July 22. That strategy has led to some additional builder gross-profit compression. PulteGroups gross margin in Q2 2025 still came in at 27.0%. While thats down from the cycle high of 31.3% at the end of the Pandemic Housing Boom in Q2 2022, it remains above pre-pandemic levels seen in Q2 2018 (24.0%) and Q2 2019 (23.1%). (Some builders, like Lennar, have seen greater margin compression.) Are bigger incentives essentially falling home prices? Sometimes, yes. Sometimes, no. In some cases, increased incentive spending is effectively a price cutjust delivered in a less visible way. But not always. Since 2022, part of the rise in incentive spending in some markets has come from homebuilders increasing base home prices and then using some of that additional revenue to fund incentives. That said, based on PulteGroups own commentary and the visible margin compression, its clear that in at least some markets, its increased incentive spending is functioning as a net effective price cut. Instead of bigger incentives, why dont homebuilders like PulteGroup just do bigger outright home price cuts? Some homebuilders prefer offering larger incentives rather than outright price cuts to protect community comps. Outright price cuts can sometimes complicate future sales and upset homebuyers currently in the backlog. Another reason more homebuilders are leaning into bigger incentives is because large builders claim theres currently arbitrage in financial markets, where every $1 spent on a mortgage rate buydown delivers a greater monthly payment reduction for the buyer than a $1 home price cut. “The focus still has been on rates and rate buydowns [rather than outright price cuts] and keeping consistency of that. And if we see a little weakness in a market or buy community, we may adjust further down, but [its] still more advantageous to the buyer and the cost is less to increase the rate buy down than to cut the price, D.R. Horton CEO Paul Romanowski told investors in April. Why does $1 spent on mortgage rate buydowns by builders create more payment savings right now than a $1 price cut? The answer is a little wonky. Heres the in-depth breakdown by housing analyst Kevin Erdmannwho is the author of the Erdmann Housing Tracker. As Erdmann explains to ResiClub: One reason that mortgage rates are higher than treasuries is that they have prepayment risk. If interest rates go up, the investors are stuck with fixed income that is lower than the new market rate. If interest rates go down, the borrowers refinance and the investors dont get the extra income from the higher fixed rates. So they charge an extra spread for prepayment risk. When short term rates are higher than [long-term rates], like they are now, the prepayment spread is higher because they expect mortgage rates to drop at some point in the future and the borrowers to refinance. If the builders arrange the terms so that the buyers are paying [a] 4% or 5% [mortgag rate] out of the gate, they [the borrower] arent going to prepay [because theyre less likely to refi] and so the prepayment spread is very low. From the borrowers perspective, the rate buydown only pays off slowly over time as you make the payments based on the low rate. They are incentivized not to refinance, sell the home, or pay the loan off early, so the expected duration of the mortgages is much longer. The builder and borrower can pocket the gains from the lower prepayment spread.” What risks do builder buydowns pose to homebuyers? While mortgage rate buydowns can offer meaningful monthly payment relief, they could also come with trade-offs. If a buyer accepts a builder buydown instead of negotiating a lower sale price, they may be locking in a deal (depending on the terms) that only pays off if mortgage rates stay elevated. Should rates fall soon after closing, that buyer may find themselves unable to benefit fully from refinancing. In that scenario, a lower sale price or another form of incentive might have offered more long-term value. Another risk is overpaying for the buydown. If a buyer stretches their budget or accepts a higher purchase price to secure the incentive, they could be more vulnerable to ending up underwaterowing more than the home is worthif local home prices decline and they need to sell within a few years. Speaking to analysts last month, KB Homewhich tends to favor direct price reductions over incentives when affordability adjustments are neededindeed warned that some buyers opting for competitors rate buydown deals may be overpaying for new homes. If those buyers need to sell soon, they could struggle to recoup the inflated base price tied to the incentive-heavy purchase. “I believe that there are customers [of other homebuilders] that are overpaying for the home to effectively get an incentive. So they’re tied into this higher price that they’re gonna be stuck with forever until they sell that home. They may potentially be upside down when they try to sell that home versus a clean, simple, transparent way of sellingthe value of what we offer, KB Home COO Rob McGibney said on the company’s June earnings call. Builder buydowns have lost a little of their magic lately Over the past year, many public homebuilders have seen mortgage rate buydowns lose some of their magicat least compared to early 2023, when buydowns played a key role in firming up new construction sales. I think the commentary that youve heard from us is that theres actually inelasticity in, you know, pricing. And that more incentives dont necessarily translate into incremental volume. So were trying to get incentives, you know, to the level where we get the appropriate level of volume. But pouring more incentives on top of that doesnt necessarily translate into the incremental volume that would justify those incentives. So, you know, thats why weve tried to continue to maintain some discipline around what were doing on the incentive load, Ryan Marshall, CEO of PulteGroup, said during the builders July 22 earnings call. Marshall added: We think the opportunity is to bring incentives lower over time. Were clearly not there right now, but, you know, I would long for the days of, you know, more normal incentive loads of 3.0% to 3.5%. Note: Net of incentives, PulteGroups average sale price was $559,000 in Q2 2025which is why we used $600,000 in the hypothetical example in the articles intro.
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Global shares were mixed Tuesday at the outset of a second day of trade talks between Chinese and U.S. officials.France’s CAC 40 jumped 1.1% in early trading to 7,887.57, while the German DAX rose 1.0% to 24,191.38. Britain’s FTSE 100 added 0.3% to 24,191.38. The future for the S&P 500 was up 0.2%. The future for the Dow Jones Industrial Average edged 0.1% higher.Japan’s benchmark Nikkei 225 fell 0.8% to 40,674.55 on broad selling of major companies including automakers and big banks. Toyota Motor Corp. dipped 2.3% and Honda Motor Co. fell 2.1%. Sumitomo Mitsui Financial Group finished 1.8% lower, while Mitsubishi UFJ Financial Group stock dipped 1.6%.Hong Kong’s Hang Seng dropped 0.2% to 25,524.45, while the Shanghai Composite gained 0.3% to 3,609.71.Analysts said investors were watching for the latest from U.S. President Donald Trump and U.S. trade talks with China in Stockholm. U.S. Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng were meeting in the Swedish capital.“Aside from addressing economic imbalances, tariffs are also now well entrenched in the geo-political arena,” Tan Boon Heng of the Asia & Oceania Treasury Department at Mizuho Bank said in a commentary.Australia’s S&P/ASX 200 edged 0.1% higher to 8,704.60.South Korea’s Kospi gained 0.7% to 3,230.57. Samsung Electronics edged 0.3% higher after jumping nearly 7% on Monday on news that it signed a deal with Tesla to provide computer chips for its electric vehicles.This week will bring a flurry of potentially market-moving data releases, corporate earnings and an interest rate decision by the Federal Reserve.The widespread expectation on Wall Street is that Fed officials will wait until September to resume cutting interest rates, though a couple of Trump’s appointees could dissent in the vote. The Fed has been on hold with interest rates this year since cutting them several times at the end of 2024.On Monday, the S&P 500 was nearly flat, edging up by less than 0.1% to 6,389.77 and setting an all-time high for a sixth straight day. The Dow dipped 0.1% to 44,837.56, while the Nasdaq composite added 0.3% to its own record, closing at 21,178.58.Hundreds of U.S. companies are lined up to report how much profit they made during the spring, with nearly a third of the businesses in the S&P 500 index scheduled to deliver updates.Companies are broadly under pressure to deliver solid growth in profits following big jumps in their stock prices the last few months. Much of the gain was due to hopes that Trump would walk back some of his stiff proposed tariffs, and critics say the U.S. stock market looks expensive unless companies will produce bigger profits.In energy trading, benchmark U.S. crude jumped 50 cents to $67.21 a barrel. Brent crude, the international standard, gained 47 cents to $69.79 a barrel.In currency trading, the U.S. dollar fell to 148.53 Japanese yen from 148.56 yen. The euro cost $1.1567, down from $1.1589. Yuri Kageyama, AP business writer
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Whats better than one peptide? A whole stack of them, apparently. Peptide stacking is the latest health hack going viral online, promising to optimize workouts and overall well-being. Peptides are short chains of amino acids that help build proteins. As the name suggests, peptide stacking involves taking multiple types of supplementsoften in the form of tablets, powders, or injectionsat once to enhance their effects and target specific fitness goals, such as building muscle, burning fat, boosting testosterone, or aiding recovery. Bodybuilders and biohackers have incorporated peptides into their wellness routines for decades. But now, interest is exploding, with social media feeds and forums flooded by users sharing (and selling) their favorite stacks. Pov: my fridge watching me inject my 20th peptide today, one TikTok user posted (their bio includes a 10% off link). Tried Semax + Dihexa and felt like I unlocked god mode for a few hours, someone wrote on Reddit. Then realized I forgot to eat all day and nearly blacked out. 10/10 focus, 0/10 life management. The fact that many of the touted benefits come from people earning commissions via discount codes or bio links is enough to raise eyebrows. Some of the concerns of what we see trending on social media are the recommended sources that you may find online that arent coming from legitimate compound pharmacies, Brandon Dawson, cofounder of 10X Health System, tells Fast Company. Also, most of these online trends are not tracked by healthcare providers or a team of specialists like you would have at 10X Health. More than 80 peptide therapies have been approved worldwide. Prescription drugs like Ozempic and Mounjaro are peptides, as is the popular fitness supplement creatine. Peptide stacking can be a powerful tool in a systems-based functional medicine plan, but its not a shortcut, Dawson adds. Without addressing foundational health pillarssleep, toxins, gut, nutritionpeptides wont reach their full potential and could cause harm if used improperly. Another concern is how peptides are being marketed to teenagers on social media. A 2023 report by the nonprofit Center for Countering Digital Hate linked peptide promotion to the broader looksmaxxing world of workout supplements and steroid-like drugs that prey on young mens insecurities. Youre falling behind bro, read the closed captions of a TikTok video posted earlier this month. Welcome to the world of peptides.
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