Homebuyer Caution Could Keep More Americans Renting as KB Home and Lennar See Housing Demand Weaken
USA | September 25, 2026: Growing caution among US homebuyers is creating another challenge for homebuilders, but the same trend could support apartment owners if more households delay buying and remain in rental housing for longer.
Executives at KB Home and Lennar have reported weaker buyer activity, citing mortgage rates, affordability pressures, rising resale inventory and broader economic uncertainty. KB Home reported a 20% year-over-year revenue decline in its third quarter, while home deliveries fell 19%.
KB Home Says Buyers Are Moving to the Sidelines
KB Home executives said prospective buyers became more cautious during the latest quarter as financial and economic concerns increased.
The company reported:
- Revenue down 20% year over year
- Home deliveries down 19%
- Gross profit margin of 16.5%
- Prospective buyer traffic down 10%
- Net orders declining year over year
KB Home delivered nearly 13,000 homes in 2025 across 49 markets in nine states. Management now expects deliveries this year to be approximately 2,000 homes below last year's level.
The slowdown indicates that affordability remains a significant barrier for households considering new homes.
Lennar Sees Similar Pressure
Lennar, the second-largest US homebuilder, reported a similar deterioration in market conditions during its latest earnings update.
The company cited interest rates and weak consumer confidence as factors limiting the improvement it had expected.
Lennar also reported a $3 million operating loss in its multifamily business, showing that apartment development is facing pressure even as weaker homebuying demand potentially supports existing rental housing.
Why Apartment Owners Could Benefit
The changing buyer calculus creates a potential demand tailwind for apartment owners.
When purchasing a home becomes less affordable, some households may postpone buying and continue renting. That can extend rental demand among households that might otherwise have transitioned into homeownership.
For apartment owners, the trend could make factors such as:
- Tenant retention
- Occupancy
- Rental affordability
- Unit upgrades
- Location near employment centres
more important as the housing market remains divided between renters and prospective buyers.
However, weaker household finances can also limit how much renters are willing or able to pay, meaning stronger rental demand does not automatically translate into higher rents.
Resale Homes Are Becoming a Bigger Competitor
KB Home and Lennar are also facing increasing competition from existing homes.
Rising resale inventory gives buyers more choices and can put additional pressure on builders to adjust prices or incentives.
KB Home said resale inventory has become a more significant competitor than it was during the last several years.
Markets including Texas and Florida are experiencing higher levels of resale inventory, according to the builders.
For new-home developers, the comparison between a newly built property and an existing home has therefore become increasingly important in pricing decisions.
Construction Costs Add Another Layer of Pressure
Homebuilders are also dealing with higher construction expenses.
KB Home cited rising fuel costs, inflation and tariffs as factors increasing direct construction and land-development costs.
The company has introduced direct fuel surcharges in some cases and is working to shorten construction timelines to offset cost pressures.
This creates a difficult equation for builders: buyers are becoming more price-sensitive at the same time that development and construction costs remain elevated.
What It Means for US Rental Housing
The combination of high borrowing costs, affordability constraints and greater resale inventory could keep some prospective buyers in the rental market.
For apartment owners, that could provide a source of demand from households delaying homeownership.
The effect will vary significantly by market, however. Local employment conditions, apartment supply, rents, mortgage rates and resale inventory will determine whether renters actually remain in place longer.
Could Housing Conditions Improve in 2027
UBS analyst John Lovallo has suggested that the 2027 spring selling season could offer a more favourable environment if inflation and geopolitical pressures ease.
That is an analyst outlook rather than a confirmed market outcome.
For now, the latest builder commentary points to a housing market where affordability and buyer confidence remain major constraints.
What Happens Next
The next few quarters will show whether buyer caution becomes a longer-term shift or improves as financing conditions and economic confidence change.
For apartment owners, the key indicators to watch are rental occupancy, tenant move-out rates, new apartment supply and local homebuying affordability.
For builders, resale inventory and buyer incentives will remain critical as they compete for a smaller pool of households willing to purchase new homes.