US Homebuilders Offer ‘Elevated’ Incentives Amid Affordability Challenges

Although new construction slowed to 27 percent in August, some markets are still experiencing a glut of leftover new homes on the market.

A model of a new single-family home at The Ridge at Stone Butte in Phoenix. Courtesy of RE/MAX Signature in Phoenix

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 indicated that builders are offering mortgage-rate buydowns, assistance with closing costs, and upgraded home amenities to attract buyers. In areas in which 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,” Redfin stated in the report. As demand escalated during the COVID-19 pandemic, new home construction increased to an approximately 35 percent share of the single-family home supply in 2022, compared with 20 percent in 2019.

While new construction slowed to a 27 percent share in August, some markets are still experiencing a glut of leftover new homes on the market. As a result, according to the report, builders may be cautious about starting new projects as they attempt to sell off existing inventory.

According to an October report, the National Association of Home Builders/Wells Fargo Housing Market Index showed that 38 percent of builders were reducing prices by as much as 6 percent, and 65 percent indicated that they were offering sales incentives to prospective buyers.

Still, the National Association of Home Builders noted that builder confidence for newly constructed single-family homes was 37 in October, up by 5 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 on 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 company based in Arlington, Texas, indicated that 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 affordability constraints and cautious consumer sentiment are still affecting new-home demand.

“We expect our sales incentives to remain elevated in fiscal [year] 2026, the extent to which will depend on market conditions throughout the year,” he said.

Auld said the company has expanded its new home construction into seven new states and 38 markets.

A newly built three-bedroom, two-bath home in Willis, Texas, is listed for $535,000. Courtesy of the Houston Association of Realtors

‘Incredible Deals’

Developers in Houston 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.

“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.

“The incentive plans change about every month based on the number of units sold,” Robinson said.

Sales of new single-family homes are comparable to those of 2024, she said, and much better than those of 2023. Pricing varies by development and location, but on average, a 1,800-square-foot new construction with three bedrooms and two baths is listed for $500,000.

Many developments offer a community center, pool, walking paths, and other amenities, along with monthly homeowners association fees.

Still, resale homes continue to draw prospective buyers.

“A lot of older neighborhoods have full-grown trees that canopy the streets and create a charming experience,” Robinson said. “A lot of people do prefer resale homes because they want trees.”

According to Robinson, the greater Houston area has more listings than ever, and buyers now have many choices and more negotiation power.

Some Areas See Higher Sales

Christy Walker, president of Phoenix Realtors, told The Epoch Times that nearly 10 percent of the 19,200 active home listings in the greater Phoenix area are new builds, and that she has seen developers offering buyer incentives.

Some of the incentives include lower interest rates of 4.5 percent on conventional loans and 4.25 percent on Federal Housing Administration loans, according to Walker. Other incentives include assistance with closing costs or home upgrades such as appliances or finishes.

Walker said she has also witnessed higher sales for new construction in the area.

“We have a new build that we’re selling, and appointments to see models on the new construction site were scooped up within the first hour,” she said.

“We now have over 600 on a waiting list to see them.”

Located in the North Phoenix area of Phoenix, The Ridge at Stone Butte offers single-family homes ranging from 1,600 square feet to 4,000 square feet and featuring gourmet kitchens, spa-like bathrooms, walk-in closets, and panoramic views of the desert.

Walker noted that new construction for a 1,800-square-foot, single-family home with three bedrooms and two bathrooms typically lists in the mid-$600,000s.

“With the median sales price of about $550,000 for a similar resale home, a lot of potential homeowners are opting for a brand-new home—one where they can actually save on mortgage interest costs,” she said.

Because Phoenix and its outlying regions have abundant available land, the area has traditionally been a popular place for new home development.

“We have a lot of out-of-state buyers looking for more affordable options, as well as some local move-up and first-time buyers,” Walker said.

New Construction in 2026

In its Emerging Trends in Real Estate 2026 report, PricewaterhouseCoopers and the Urban Land Institute forecast that builders are looking to the future with cautious optimism. Although new homes and resale inventory are increasing, some builders are shifting to single-family rental partnerships and slowing down on major land purchases.

“Affordability remains the greatest challenge and is being addressed by constructing smaller, lower-spec homes, as most buyers are willing to sacrifice size and finishes for price relief,” the report stated.

The report suggested that one method that builders could use to make homes more affordable is to build smaller ones. The average size of a new single-family home fell to 2,386 square feet in the second quarter from a peak of 2,692 square feet in 2016.

Other builders say they plan to lower the ceiling height, provide fewer windows, and add lower-finish countertops to save costs.

Some builders surveyed believe that rising costs in labor and materials could be challenging over the next two years. Almost all stressed the need for collaboration with local municipalities to allow for increased density, thereby reducing housing costs and streamlining the permitting process and project approvals.

In a report earlier this year, the National Association of Realtors found that the South is experiencing some of the best deals in new home construction. It named the five markets with the largest declines in new home prices: Little Rock, Arkansas, with a 15.6 percent drop; Austin, Texas, with an 8.5 percent decline; Wichita, Kansas, with a 7.9 percent decline; Jacksonville, Florida, at a 7.8 percent decline; and Cape Coral, Florida, with a 7.4 percent drop.