New construction is not oversupplied. It is under-demanded at current prices. In the Seattle metro, new homes now make up about 12.6 percent of sales, down from 16.3 percent in 2019, and for three straight quarters newly built homes have taken price reductions at a higher rate than existing homes. One in five new builds cut its price in the second quarter of 2026.
The homes are not the problem. The carrying costs while they sit are the problem. Every spec home on your books is a monthly bill, and most builders we talk to cannot state that bill to the dollar. This guide fixes that.
1. Know your monthly carrying cost per spec
Fill this in for each unsold home, using your actual loan balance and rate.
| Cost | Monthly amount |
|---|---|
| Construction loan interest (balance × rate / 12) | $ |
| Property tax (annual bill / 12) | $ |
| Builder's risk / homeowner insurance (/ 12) | $ |
| Utilities, landscaping, staging | $ |
| HOA dues, if any | $ |
| Total monthly carrying cost | $ |
Worked example: a $900,000 spec with a $700,000 construction loan at 8 percent. Interest comes to $4,667 a month, property tax about $750, insurance about $200, utilities and upkeep about $400. Total: just over $6,000 per month, every month, until it closes. Six months of sitting costs $36,000. Write that number on a sticky note and put it on the plan set.
2. Run the cut math before you run the hold math
Builders resist price cuts because the cut feels like a loss. It is not a loss. It is a trade against carrying costs you are already paying. The rule: a price cut pays for itself if the carrying costs it saves exceed the cut.
Using the example above, a $35,000 price reduction that sells the home 6 months sooner saves roughly $36,000 in carrying costs. You come out ahead, and you free the capital and the crew for the next project. A cut that sells it 3 months sooner saves $18,000 against a $35,000 cut, so it does not pencil out, and you hold or cut less. The question is never whether the cut is painful. The question is whether the cut is cheaper than the months it buys you. Run both sides every time.
3. Build the 13-week cash forecast
Per-project carrying costs are only half the picture. The other half is timing across all your projects at once: draws coming in, interest going out, closings landing or slipping. A rolling 13-week cash forecast, updated weekly, answers the only question that matters in a slow market: which week do we run short, and what do we do about it now? It tells you whether you can afford to hold a spec for 90 more days, whether to slow the next start, and what to tell your lender before they ask. If you do not have one, that is the single highest-value finance project a builder can do this quarter.
4. Talk to your lender early
Lenders have seen this cycle before. What they cannot tolerate is surprise. A builder who walks in with a 13-week forecast, a per-spec carry-cost schedule, and a plan for each unsold home gets extensions and understanding. A builder who walks in after missing a payment gets covenants. Bring the math from steps 1 through 3 to the conversation. It changes the tone completely.
Your spec homes are not just inventory. They are monthly expenses with addresses. Price every decision, cut or hold, against the carrying cost of time. The builders who do this math calmly are the ones still building when the market turns.