More than half of the single-family builder respondents to the NAHB/Wells Fargo Housing Market Index in May reported that they had used incentives in order to boost sales and/or limit cancellations.
According to the NAHB, this matches the share of builders that used sales incentives during normal market conditions in 2003 and marks a far lower share than in the recession’s peak. By comparison, in May 2007, 73% of builders reported offering some sort of incentives to draw in home buyers.
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? The three most likely are:
- Options or upgrades at no or reduced cost (19% of builders report using)
- Payment of closing costs or fees (19%)
- Price discounts/Margin reductions (18%)
