In the first weeks of December, 75% of home builders surveyed nationally by John Burns Real Estate Consulting said they are buying down buyers’ mortgage rates to provide much-needed cost relief and boost sales. Of all builders surveyed, 32% are buying down the full 30-year term, while another 30% of builders are offering temporary buydowns that will reduce the rate for the first two years of the mortgage, John Burns Real Estate Consulting reports.
Incentives like rate buydowns are becoming increasingly necessary for builders to strengthen buyer demand and maintain lengthy backlogs throughout a nationwide housing correction.
Incentives have become a necessity in today’s new home sales environment and are helping preserve builders’ backlogs as confirmed by builders in our surveys:
- “Everyone is requiring incentives, including price reductions, rate buydowns, closing costs, etc.” (Riverside-San Bernardino, CA)
- “Rate buydowns and/or rate lock promotions are working best. Sales are still slow; however, cancellation rates have decreased.” (Colorado Springs, CO)
- “100% of backlog is being offered some kind of rate buydown that is comparable to new sales.” (San Antonio, TX)
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