Home Builders Offering Discounts to Entice Buyers
Builders are offering more incentives amid slower sales and rising costs, creating new opportunities for buyers this spring.
WASHINGTON — Home builders are increasingly offering discounts and incentives to prospective home buyers.
Builders make about 40% of their annual sales during spring, but demand has been down due, in part, to high mortgage rates and recent tariffs.
D.R. Horton reported its revenue declined 15% in the last quarter compared to a year ago, and PulteGroup said its revenue fell 2%. Those figures came in before the tariffs took effect.
LGI Homes reported that suppliers are already planning higher prices, particularly for goods imported from China. Builders estimate that new house prices will increase between $5,000 to $15,000 due to tariffs, but some building materials suppliers say they are holding prices steady for now.
To entice home buyers to take the plunge, builders are offering design upgrades, mortgage-rate buydowns and price cuts, as the number of new homes unsold has reached the highest levels since 2009.
Rick Palacios, head of research at John Burns Research & Consulting, said that home builders have increased their use of incentives this spring, and sweeteners have been equal to 7.25 of the home purchase prices in the first two weeks of April, up from 6.1% in January, according to John Burns data.
Typically, in spring, builders increase house prices and reduce their incentives. Builders say that their use of incentives and their low profit margins are likely to continue throughout 2025 unless mortgage rates fall and entice buyers to make purchases.
Source: Wall Street Journal (05/01/25) Ryan, Carol
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