Builders have become more eager to offer prospective home buyers incentives— including more affordable rate buy-downs, reduced closing costs and free amenities—as mortgage rates soared to a 22-year high last quarter and more homes emerged on the market.
KEY FACTS
Ryan Marshall, president and CEO of home construction company PulteGroup Inc., said during a second-quarter earnings call that a majority of incentives offered are longer-term mortgage rate locks or rate buy-downs–or when the buyer pays more upfront for a lower interest rate–noting “many of today’s home buyers can still afford the price of a new home,” but some need help affording mortgage rates.
Kimberly Mackey, founder of New Homes Solutions, says sales representatives are eager to provide buyers with “as much as possible” while giving “something like a refrigerator … or blinds, or something along those lines, to incentivize a buyer” to move quickly on purchasing a home.
Builders are promoting possible incentives with home buyers upfront rather than through the offer process, Rose Quint, an economist with the National Association of Home Builders, told Forbes, as 53% said they offer incentives ranging from reduced closing costs to buy-downs.
Faith Floyd, an agent for real estate brokerage Redfin, said she’d “seen at least one offer a $10,000 check for closing costs, a $3,000 gift card and a free fridge.”
Some builders are offering to buy down a buyer’s mortgage rate by 1.5 percentage points, Floyd said, while Marshall added incentives are “now expanding to include discounts on options and lot premiums.”
Source: forbes.com
