Home Builders are Offering Big Incentives: Now’s the Time to Make a Move

New homes continue to be built at record speed across the country, but because of economic uncertainty builders are having a hard time selling them. Builders are combating this issue by offering impressive buyer incentives, so now may be the time for your clients to make a move!

According to realtor.com, “The spring buying season, when builders make close to 40% of their annual sales, is halfway over. Based on earnings released by listed builders, demand has been disappointing. America’s biggest builder, D.R. Horton, said revenue fell 15% in its latest quarter compared with a year ago.”

With pressure being put on suppliers to increase the cost of materials due to inflation and tariffs, builders may soon have to raise the prices of new homes to offset the difference. In fact, some reports are showing that the number of new homes that are unsold and just sitting has reached the highest level since before 2010. This is why many builders have begun offering discounts and incentives to get their homes sold.

This type of behavior is usually unheard of in the spring market when new homes see the most movement. But many builders are combating the slow market strategically. According to realtor.com, “(Builders)…offered sweeteners equivalent to 7.2% of the home purchase prices in the first two weeks of April, up from 6.1% in January.”

The following issues are slowing down new home sales right now:

• Mortgage rates hovering between 6-7%. Many potential buyers are looking for rates to drop before making a decision to buy a new home.
• Existing home competition. The homes going on the market in areas where new homes are being built creates competition. Some buyers are seeing the benefit to buying an existing home if the price is lower and still meets their must-haves.
• First-time buyers aren’t able to make the numbers work. For new homes, many first-time buyers aren’t able to afford the costs right now.
• Increase in housing material cost and shipping. The more the material cost to build the homes, the higher the selling price will need to be.

Builders understand these issues impacting their market and are looking to make deals to offset them. If your clients are interested in a new home, now may be the time to push back and see how far a builder is willing to bend to make a deal happen. And a savvy agent and lender will be able to help their clients navigate this process in a way that’s beneficial to all parties.

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