Fewer Builders Using Incentives to Bolster Sales Now

June 2, 2020
Wooden frame house under construction
By Tomasz Zajda

More than half of single-family builders are using incentives to bolster sales and limit cancellations, according to an NAHB/Wells Fargo Housing Market Index survey in May. But this is less than the number of builders using incentives during the Great Recession, over 73 percent, and even under the percentage in normal times: In April of 2019 amidst a housing shortage, 64 percent of builders were offering deals. Though not as many builders as in the past are using offers during this pandemic, the ones who do find that some strategies are better than others with paying for closing costs and fees being the most effective. Find out other strategies builders are using to drum up sales. 

The NAHB/Wells Fargo Housing Market Index (HMI) survey conducted in May reveals that more than half of single-family builders are using incentives to bolster sales and/or limit cancellations. This is essentially the same share of builders that were providing incentives during normal market conditions in 2003. By contrast, the percentage of builders providing sales incentives was far higher during the Great Recession.

The May 2020 survey reveals that 48% of single-family builders are not using incentives to bolster sales and/or limit cancellations. This of course implies that slightly more than half, 52%, are using some kind of incentive to achieve that objective.

What specific incentives are they using? Figure 1 shows the complete list, but the three most likely are: ...

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