While the new home market had been holding up surprisingly well in the face of rising mortgage rates through the summer, our September survey suggests that demand is becoming more-materially impacted. This was underscored by the second-largest sequential decline in September orders in our survey’s history and a negative early reading for October. Meanwhile, the use of incentives climbed for the second straight month at a worse-than-seasonal rate as recent pricing power wanes and homebuilders aim to ease the affordability and qualification burden from higher mortgage rates. Cancellation rates inched higher sequentially, but remain at historically-average levels, underscoring a relatively healthier backlog composition than a year ago. Overall, a still-solid economy is mitigating a material slowdown in demand, but it is clear the tides are shifting in the new home market from the surprising strength witnessed earlier in the year.