Homebuilders want to turn buyers on to new-home construction, and they’re willing to sweeten the pot to do so. More builders reportedly are offering discounts or offering free upgrades—like new appliances—or covering closing costs to attract buyers.
Most of these incentives appear to be targeted at new homes or developments already in the works. “Builders with standing inventory will seek to sell it as quickly as they can,” says Robert Dietz, chief economist with the National Association of Home Builders.
Dietz estimates that builders have about 80,000 completed inventory homes ready for buyers nationwide. He also estimates an extra 540,000 homes in some stage of construction.
Sales of new-homes dropped 9.5% in March compared to a year earlier. Dietz expects new-home sales to continue to slow due to climbing unemployment.
“The market is on pause,” Dietz told realtor.com®. “Incentives will be used to offset prices as we see a surge in unemployment.”
Builders are offering different degrees of incentives. For example, the homebuilder Drees Homes is offering discounts in some locales, such as $1,000 for buyers who sign a contract by the end of May or an extra $5,000 toward closing costs for those who book a tour virtually or in person. They’re also offering in some markets up to $10,000 toward outdoor amenities such as kitchens and entertaining areas.
“Right now, we are just encouraging buyers. We’re still here, and we’re open for business,” Alicia Engelking, marketing director for Drees Homes in Houston, told realtor.com®.
Neals Communities, selling in communities on the west coast of Florida, began offering to waive closing costs for up to $18,000 on 80 of its homes that were finished or are currently under construction.
The builder Kenco is discounting up to $50,000 on some of its completed home inventory priced between $600,000 and $1 million.
Builders like Lennar Corp. and Ryan Homes are reportedly offering $7,500 in closing costs on new homes. Lennar is also offering an extra $5,000 to $10,000 off its selling price in some markets. Its mortgage company is touting 2.7% interest rates on 30-year fixed-rate mortgages for select homes (Freddie Mac reports the national average is 3.26%, for comparison).
In Wellington, Fla., three builders are offering discounts in a planned “agrihood” community accompanying a 5-acre working farm. “It’s a buyer’s opportunity to get a great price,” Susan Moguel, Arden’s marketing director, told realtor.com®.