While new construction has slowed to 27 percent in August, some markets are still experiencing a glut of leftover new homes on the market.
Faced with affordability constraints and cautious demand, and with abundant land in states such as Arizona, Utah, Texas, and Florida, many developers are offering enticing incentives to potential homebuyers.
A recent Redfin report indicates that builders are offering mortgage-rate buydowns, assistance with closing costs, and upgraded home amenities to attract buyers. In areas where supply exceeds demand, the report found builders offering up to $10,000 in closing costs, as well as top-of-the-line appliances or home finishes.
“New homes still make up a significantly higher portion of the single-family supply than before the pandemic,” the report states. As demand escalated during the COVID-19 pandemic, new home construction increased to approximately 35 percent in 2022, up from 20 percent in 2019.
While new construction has slowed to 27 percent in August, some markets are still experiencing a glut of leftover new homes on the market. As a result, the report indicates, builders may be cautious about starting new projects as they attempt to sell off existing inventory.
In its October report, the National Association of Home Builders’ (NAHB) housing market index (HMI) found that 38 percent of builders were reducing prices by as much as 6 percent, while 65 percent indicated they were offering sales incentives to prospective buyers.
Still, the NAHB noted that builder confidence for newly-constructed single-family homes was 37 in October—up by five points from September and the highest reading since April.
D.R. Horton, one of the country’s largest homebuilders, recently reported that its homebuilding revenue for the fiscal year ending Sept. 30 decreased by 7 percent to $31.5 billion, with homes closed dropping by 5 percent to 84,863.
In an Oct. 28 statement, the Arlington, Texas-based company indicated it had 29,600 homes in inventory, of which 19,600 were unsold as of the end of September.
David Auld, D.R. Horton’s executive chairman, said that affordability constraints and cautious consumer sentiment are still impacting new-home demand.
“We expect our sales incentives to remain elevated in fiscal 2026, the extent to which will depend on market conditions throughout the year,” he said.
Auld said that the company has expanded its new home construction into seven new states and 38 markets.
‘Incredible Deals’
Developers in Houston, Texas, are offering “incredible deals,” Houston Association of Realtors Vice Chair Kat Robinson told The Epoch Times.
“Some of them have mortgage interest rates as low as 3.99 percent—that’s unbelievable,” she said.
“So now buyers have the choice of paying around 6 percent for a resale where they may have to make some repairs, or just drive an extra 15 minutes to buy something new for a much lower rate.”
Other concessions include help with closing costs or upgrades to appliances or countertops.
By Mary Prenon
