Beazer Homes is addressing housing affordability without shrinking floor plans. Instead, it focuses on lowering construction costs, competitive mortgage bidding and reduced insurance expenses, the company's chief executive told Homes.com Friday in an exclusive interview.
“One of the things that we're really fixated on is reducing the energy cost to operate a home, and the choices we make and how we build the home," said CEO Allan Merrill. "The materials that we use have a really dramatic effect on the operating cost of the home. That's a big chunk of improved affordability.”
The Trump administration has pressured homebuilders to address the nationwide shortage of affordable housing by increasing the production of less expensive homes, even as they face sales declines amid an economic slowdown.
Merrill said the impact of high permit and entitlement fees has become a barrier to housing affordability.
"We’ve done something as a society with housing policy, where we’ve made these permit fees and entitlement costs so great that it’s dramatically and adversely affected the cost of housing," Merrill said. "What used to be $10,000 in fees is $50,000, $60,000, $80,000, $90,000.
For example, "in California, in many jurisdictions, it’s $100,000 to $150,000 before we start a home. If I could wave a magic wand, we’d really attack the scourge of that fee infrastructure, because it’s dramatically changing our ability to deliver homes that are affordable," he added.
Some builders have downsized their homes to lure buyers frustrated by elevated home prices and mortgage rates. However, the trend isn’t universal. In fact, the average size of a new home reached 2,407 square feet in the first quarter of 2025 — up from 2,351 square feet in the same period a year before, according to U.S. Census Bureau data. That’s a difference of 56 square feet, roughly the size of a generously proportioned full bathroom.
All Beazer homes are built to the Energy Rated Value — a benchmark that exceeds building codes and emphasizes insulation, air filtration and low humidity levels, the company said.
While many large builders operate their own mortgage divisions, Merrill said, Atlanta-based Beazer Homes takes a different approach. Merrill said that they select a small group of lenders for each community, tailored to buyer profiles and locations, and incentivize buyers to get multiple proposals.
“We take out that middleman, that also reduces costs for homeowners,” Merrill said.
Merrill added that Beazer has an in-house insurance agency that manages all the paperwork and logistics for homeowners as well as title insurance, keeping costs competitive for buyers. “When you combine mortgage rates, utilities and insurance rates, you can make hundreds of dollars of difference in affordability,” he said.
‘Challenging’ environment for builders
America’s largest homebuilders are struggling to entice buyers even when they offer them mortgage rates as low as 4%.
According to data from the Federal Reserve Bank of St. Louis, the number of newly completed but unsold homes has climbed to levels not seen since the summer of 2009. Executives at Beazer Homes throughout their earnings calls have described the sales environment in 2025 as “challenging,” “weaker than anticipated” and “slower-than-expected.”
To further support buyers, Beazer offers closing cost contributions to those who participate in competitive mortgage bidding, helping secure better rates and service. The builder is currently offering mortgage rates as low as 3.99% to 4.99%.
Despite these efforts, regional performance has varied. In the third quarter, Beazer's new home developments in Texas stood out for their notably slower sales per community, dropping well below historical norms. While other regions performed in line with expectations, the overall rate at which homes were sold, known as the absorption rate, declined year-over-year. The absorption rate measures how quickly available homes are sold in a given period, and a lower rate indicates slower sales.
“We’ve spent so much time on building a different home, a better home, [with] different materials requiring different trades,” Merrill said.
But in focusing so much on these technical improvements, “we fell behind on curb appeal” and to address this, they rolled out “a refresh of our product” in the Texas market and that’s made a noticeable difference, while handling operational changes too, Merrill said.
The challenges aren’t specific to Beazer Homes. D.R. Horton, one of the largest homebuilders, has tried to lure buyers by offering 3.99% mortgages. It has also reduced its average selling price by 3% over the past 12 months and expects to cut prices further in the 2026 fiscal year.
“You can’t fix confidence with price, and that’s definitely one of the phenomena we see out there,” Merrill told investors and analysts during a call on the company’s third quarter earnings that ended June 30.
Merrill said demand for new homes is “hugely impacted by jobs.” Regions with strong employment and stable job markets tend to see better homebuying activity.
“Consumers are aware of the fact that there have been other layoffs, and they may not have been impacted, but in the back of their mind, I wonder if they might," Merrill said Friday. "And as soon as they start wondering about that, that tends to get in the way of buying a home,” he said.