Homebuilders Across the Country Sweeten Deals to Woo Buyers

by | Dec 18, 2023 | Blog, Buying a Home, Denver Real Estate Market, Mortgage & Finance, Real Estate | 0 comments

Homebuilders in the Denver market are ramping up incentives to attract buyers amid rising mortgage rates and affordability challenges. Builders are finding creative ways to keep sales momentum, according to the Denver Business Journal.

The Department of Housing and Urban Development and U.S. Census Bureau data cites that housing starts in September increased by 7%, reaching a seasonally adjusted annual rate of 1.36 million units. The scarcity of existing-home inventory is pushing new construction into the spotlight across the country, with 31% of homes available for sale nationwide in August being new builds—well above the historical average, which is typically 12%-14%.

Builders are using a range of incentives to seal deals, according to the National Association of Home Builders/Wells Fargo Housing Market Index. The most popular incentives include covering closing costs or fees (34%), offering no-cost or discounted options/upgrades (32%), reducing home prices or margins (31%), mortgage rate buydowns (29%), and absorbing financing points for buyers (21%).

Major builders are already reaping the rewards of such incentives. The Denver Business Journal reports that Pulte Group Inc., based in Atlanta, saw a 43% increase in new home orders during the third quarter. Pulte’s President and CEO, Ryan Marshall, highlighted the power of the “permanent 30-year buydown,” offering a 5.75% rate on a 30-year fixed mortgage as a potent lure for buyers in the current 8% mortgage rate environment.

The Denver Business Journal also looks at Lennar Corp. in Miami as strategically employing mortgage concessions, tailoring incentives based on regional market dynamics. Jon Jaffe, Lennar’s Co-President and Co-CEO, emphasized the flexibility in managing incentives to meet individual buyers’ needs, particularly in markets experiencing housing-market shifts.

Even builders such as Los Angeles-based KB Home, reporting a 7% growth in new orders in the third quarter, are adapting. While KB Home’s built-to-order business sees fewer financing concessions, incentives are still offered for “inventory homes” nearing completion.

In the face of surging mortgage rates, Denver’s home market is still thriving, fueled by builders’ inventive strategies to make homeownership more accessible.

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