Home builders are trying to entice buyers by covering their closing costs, and offering discounts and free upgrades such as new appliances.
The incentives are aimed at new homes and developments that are currently in the works.
“Builders with standing inventory will seek to sell it as quickly as they can,” Robert Dietz, chief economist with the National Association of Home Builders, said in an interview with realtor.com.
According to Dietz, builders have an inventory of around 80,000 new and completed homes ready for sale nationwide. He said that there’s another 540,000 new homes in some stage of construction.
Builders are worried because sales of new homes fell by 9.5% in March compared to one year before. And Dietz said new home sales will stay sluggish as a result of rising unemployment due to the COVID-19 pandemic.
“The market is on pause,” Dietz said. “Incentives will be used to offset prices as we see a surge in unemployment.”
Home builders are offering different kinds of incentives. For example, Drees Homes is touting discounts of up to $1,000 in some areas for buyers who signs a contract before the end of May. It’s also offering an extra $5,000 towards closing costs for those who book a virtual tour or visit a property in person. In addition, the developer is offering up to $10,000 towards amenities such as kitchens and entertainment 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.
Another builder, Neals Communities, which sells homes in Florida, is offering to waive closing cost fees of up to $18,000 on 80 of its new homes. And Kenco is discounting up to $50,000 on some of its completed home inventory priced between $600,000 and $1 million.
Bigger builders such as Lennar Corp. and Ryan Homes are getting in on the act too, offering up to $7,500 in closing costs on new properties. In addition, Lennar is also offering $5,000 to $10,000 discounts on its selling prices in select markets. Meanwhile its mortgage company is offering low 2,7% interest rates on a 30-year fixed-rate mortgage on some homes. The national average is currently 3.26% according to Freddie Mac, so that’s a solid discount.