The real estate market in Mesa and the Greater Phoenix area has seen dramatic shifts over the past few years. With fluctuating interest rates, changing buyer demand, and supply chain issues, new home construction has been right at the center of it all. While prices for new builds have remained relatively high due to rising material costs and labor shortages, a change is on the horizon—and it’s one buyers have been waiting for.

We’re starting to see the first signs that the price of new builds will need to come down, and there are several key factors driving this trend.

Supply Is Finally Catching Up

For years, the Greater Phoenix area—and Mesa in particular—has experienced low housing inventory. Builders raced to keep up with demand, and with limited availability, prices soared. However, that equation is beginning to shift.

Despite the continued rise in the cost of building materials, many of which are sourced internationally, the number of new homes hitting the market is starting to exceed demand. This imbalance is matters because when supply outpaces demand, price adjustments are almost inevitable.

Builders can no longer count on buyers lining up for every new release. The early months of this year marked a notable shift. January and February saw the highest number of new home closings in Greater Phoenix since 2006—a positive sign, but also an indicator that the market may be saturating.

Builders Are Already Making the First Moves

One of the clearest indicators of this shift is that builders themselves are already starting to cut their base prices. KB Home was the first major builder to report price reductions in response to market conditions. Instead of simply offering incentives like appliance upgrades or covering closing costs, some builders are taking the more impactful step of reducing their base pricing—an unusual move in what has been a red-hot market.

While many builders are still leaning into concessions (offering lower interest rates, free upgrades, or limited-time financing deals), this may only be a temporary strategy. When incentives aren’t enough to attract buyers, price cuts often follow. The trend is subtle right now, but it’s there—and likely to grow stronger over the next few months.

Stock Performance Signals Industry Concerns

If you want to see what’s happening behind the scenes, look no further than the stock market. Publicly traded homebuilders are showing clear signs of stress. Lennar, one of the biggest names in home construction, is down 32% over the past 12 months. DR Horton has fallen 22%, and even Toll Brothers, which typically serves a higher-end market, is down 22% from the same time last year.

These declines aren’t just about broader economic trends—they reflect concerns that builder profit margins will shrink as price reductions become necessary to move inventory.

When large-scale builders are facing this kind of pressure, it typically means that they’ll be making strategic changes to pricing and production levels in the coming months. That’s good news for buyers who may have been priced out of the new construction market last year.

What This Means for Buyers in Mesa

If you’ve been waiting for a more affordable opportunity to buy a brand-new home in Mesa, now is the time to keep a close eye on the market. Builders are becoming more flexible, and with rising inventory, you may be able to negotiate better pricing or take advantage of incentives that weren’t available six months ago.

While interest rates remain a consideration, the ability to negotiate a lower purchase price or get a rate buydown from the builder can make a significant difference in your monthly payment and long-term investment.

Additionally, the variety of new homes available is expanding. With builders eager to maintain sales volume, we're seeing more move-in ready homes and greater customization options—giving buyers more leverage and choice.

What This Means for Sellers of Resale Homes

On the flip side, if you're a homeowner thinking of selling, it’s important to understand how this shift in the new build market can impact you.

When brand-new homes start to become more affordable—and builders begin cutting prices to compete—it puts pressure on the resale market. Buyers who might have considered an existing home may now opt for new construction if the price gap narrows. This could mean more competition for resale sellers, especially in neighborhoods near new developments.

As your local real estate expert in Mesa, I work closely with clients to help them price their homes competitively while highlighting the unique value resale properties offer, like larger lots, mature landscaping, and established communities.

Looking Ahead

The bottom line is this: while the cost of building homes has gone up, market forces are pushing new home prices down. With supply now exceeding demand, builders are adjusting. We’re already seeing the early indicators—price reductions, generous incentives, and a shift in builder strategies.

For buyers, this presents a real opportunity. Whether you're looking for your first home, upgrading, or relocating to Mesa, staying informed about market shifts like this one can help you make a smart, timely investment.

And for sellers, this means it’s more important than ever to have a strategy. Understanding how your home compares to the competition—including brand-new builds—will be key to selling successfully in this evolving market.

Let’s Talk Strategy

If you're considering buying a new home or selling your current one, now is the time to act with a well-informed plan. As a local real estate expert with years of experience in the Mesa market, I’m here to help you navigate these changes with confidence.

Let’s talk about how today’s shifting market affects your goals—and how we can put you in the best position for success.

Contact me today, I’d love to discuss the currnet market with you and help you make the best move for your situation.

By Lorraine Ryall, Associate Broker, CDPE, CSSN, CNE

KOR Properties