Builder Incentives Just Hit a 5-Year High — Here's How to Use Them to Your Advantage
If sticker shock and high rates have been slowing your home search, there's a shift you should know about: builders are paying more than they have in years to win your business.
Incentives—from mortgage rate buydowns to closing-cost credits and free upgrades—just climbed to a five-year high. That can translate into real savings if you know how to shop them strategically.
What Changed?
Fresh data from the National Association of Home Builders shows 66% of builders offered sales incentives in August, up from 62% in July and the highest share since the post-COVID period began. At the same time, 37% of builders cut prices, with an average reduction of 5%—levels that have persisted through the summer.
In plain English: more room to negotiate, more ways to reduce your monthly payment.
Builder incentives are at a five-year peak—a rare window for buyers who've been waiting for affordability to improve.
What Counts as a "Builder Incentive"?
Think of incentives as tools to bridge the affordability gap without rewriting the base price:
💰 Mortgage Rate Buydowns
Temporary or permanent rate reductions
💵 Closing-Cost Credits
Prepaid items or direct credits
🏠 Free Upgrades
Appliances, flooring, or cabinets
🛡️ Extended Warranties
Design-center allowances
Why Builders Are Doing This Now
Two forces are at work:
Affordability Pressure
New-home prices have eased from last year's highs, but costs are still challenging many buyers. In July, the median new-home price fell to $403,800, down 5.9% year over year—a sign builders are leaning on price cuts and incentives to keep traffic moving.
Softer Builder Confidence
Recent NAHB surveys show sentiment stuck at relatively low levels, with a growing share of companies using incentives to convert interest into contracts. Price cuts (37%) and incentives (66%) are the headline tactics.
Rate Buydown vs. Price Cut: Which Actually Saves More?
Here's the counterintuitive part: a dollar spent on buying down your interest rate often reduces your monthly payment more than a dollar taken off the purchase price. That's why many large builders are prioritizing buydowns over headline price chops.
Bottom line: Don't fixate only on price—ask how the incentive affects your payment.
How to Shop (and Stack) Builder Incentives Like a Pro
At Preferred Homes Corp, we help clients approach incentives the way pros do—by aligning them with your financing, timeline, and long-term plans.
1. Get Pre-Approved First
A lender letter anchors your budget. With that in hand, compare the net effect of incentives on your monthly payment and cash to close, not just the sticker price.
2. Ask the Magic Question
"What's available today on this community and floor plan?"
Incentives change fast and may vary by lot, inventory home, or build stage. Some are tied to using the builder's preferred lender—we'll run both scenarios to find the best deal.
3. Prioritize Buydowns for Long-Term Holds
Permanent buydowns can pay for themselves over time. Temporary 2-1 buydowns can bridge today's rates and potential future refinancing. Evaluate both against a simple price cut.
4. Don't Overlook "Boring" Credits
Closing-cost help, prepaid escrows, or HOA initiation-fee credits reduce cash needed at closing—often the difference between buying now or later.
5. Use Comps to Avoid Over-Improving
Upgrades are fun; resale markets are practical. We'll benchmark nearby sales so your design-center spend stays aligned with neighborhood value.
6. Stack Equity + Incentives
If you're a move-up buyer bringing equity from a sale, easing new-home prices and today's incentives can offset the rate environment.
Final Thoughts
If you pressed pause earlier this year, re-run the math with current incentives. The combination of slightly softer prices, payment-friendly buydowns, and a competitive builder pipeline could make your target home attainable again.
New construction can also compete with resale in certain markets, thanks to builder flexibility and included warranties.
Disclaimer: This article provides general market insights and is not financial or investment advice. Real estate market conditions are subject to change. For personalized guidance, please consult with a qualified mortgage professional at Preferred Homes Corp.
Ready to Get Started?
Contact Preferred Homes Corp for personalized mortgage guidance