Input costs set the floor on what it takes to build profitably; supply and demand set the ceiling on what builders can charge. When commodities like lumber and copper spike, builder margins get squeezed, so builders try to raise prices to protect profitability. Whether that sticks depends on the market around them. When inventory is low and demand is strong, builders have the pricing power to pass costs straight through to buyers. When conditions flip, so does the dynamic. If builders have put up more homes than current demand can absorb, they lose pricing power and start cutting: outright price reductions, closing-cost credits, or buying down a buyer's rate to move standing inventory. That eats into the margins they earned on the way up, which is worth remembering before feeling too sorry for them. Commodity prices themselves swing hard and correct hard, and those input swings feed into broader inflation on a lag, so a hot lumber print today tells you less about next year's home prices than the local supply picture does. For a buyer, the takeaway is practical. In a market where builders have overbuilt, incentives are on the table and worth negotiating hard for. In a tight market, expect far less give. Read the local supply picture before assuming builder costs alone tell you where prices are headed.