Americans Still Can't Afford to Buy — and Homebuilder Stocks Are Paying the Price

A BofA Securities analyst says that Homebuilder stocks lagged the broader market in the first half of 2026, according to the firm’s midyear report.

The S&P Composite 1500 Homebuilding Index gained about 6% through June 30, trailing the 9% advance in the S&P 500.

BofA noted that homebuilder shares remained volatile, while average 2026 earnings-per-share estimates for its coverage universe fell about 18% since the start of the year, with stock performance closely tracking earnings revisions.

Housing Affordability Bill Hits A Snag Last week, a housing affordability bill cleared Congress, and homebuilder stocks staged their strongest session in months.

Major stocks like D.R.

Horton, Inc. (NYSE: DHI ), Lennar Corporation (NYSE: LEN ) and PulteGroup, Inc. (NYSE: PHM ) joined the rally.

However, President Donald Trump abruptly canceled the signing ceremony for the bipartisan 21st Century ROAD to Housing Act, which is the most sweeping housing affordability bill in decades.

Read Also: What The Housing Bill Actually Does Affordability Remained A Major Hurdle BofA analyst says affordability pressures, elevated housing inventory and higher construction costs continued to weigh on the U.S. housing market.

The median age of first-time homebuyers reached a record 40 years in 2025, and most prospective buyers still believe it is a poor time to purchase a home.

Mortgage rates remain below year-ago levels but have moved higher during 2026.

The analyst also pointed to increased consolidation in the sector.

Sumitomo Forestry Co., Ltd. (OTC: SMFRF ) agreed to acquire Tri Pointe Homes, Inc., while Berkshire Hathaway Inc. (NYSE: BRK ) announced plans to acquire Taylor Morrison Home Corporation (NYSE: TMHC ), signaling stronger merger and acquisition activity.

Weak Demand Across Major Regions Housing demand remained subdued but resilient despite macroeconomic headwinds.

The median price of a new home was 2% below the median resale home price in May, compared with the historical 15%–20% premium for new homes.

Regional trends remained mixed, the analyst added.

Home prices declined in Texas, while the Midwest, Mid-Atlantic and Northeast continued to post gains.

BofA also highlighted slowing U.S. population growth, with weaker migration and job creation in the Southeast, particularly Texas and Florida.

Public homebuilders have responded by slowing land purchases and share repurchases while increasing housing starts in high-growth communities.

Construction costs remained under pressure, with labor and material expenses rising about 8% year to date through May.

Despite these challenges, existing home sales have begun to recover gradually from depressed levels.

Existing home inventory reached its highest level since 2019, rental vacancy rates increased.

Looking Ahead BofA expects homebuilder return on equity to weaken in 2026 due to lower pricing, higher sales incentives, SG&A deleveraging and rising land costs.

The analyst expects elevated housing inventory and continued construction cost inflation to remain key risks through the second half of 2026, even as several housing market indicators show signs of stabilization.

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