NAHB economist says builders have about 80K completed inventory homes and 540K in some stage of construction. The incentives will offset prices as unemployment rises.
Homebuilders want attract buyers, and they’re sweetening the pot to do so. More builders are offering discounts or offering free upgrades – like new appliances or paying closing costs – to attract buyers. Most 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 offer different degrees of incentives. For example, Drees Homes offers 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, either virtually or in person. But in some markets, they’re also offering up to $10,000 toward outdoor amenities such as kitchens and entertainment areas.
“Right now, we are just encouraging buyers. We’re still here, and we’re open for business,” says Alicia Engelking, marketing director for Drees Homes in Houston.
Neals Communities, which sells in communities on Florida’s west coast, will waive closing costs 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 reportedly offer $7,500 in closing costs on new homes. Lennar offers an extra $5,000 to $10,000 off its selling price in some markets, and its mortgage company promotes 2.7% interest rates on 30-year fixed-rate mortgages for select homes.
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,” says Susan Moguel, Arden’s marketing director.
Source: “Homebuilders Are Now Offering Deals, Incentive on New Construction to Lure Buyers,” realtor.com® (May 12, 2020)
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