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When interest rates began to rise from their historic lows of 2021, existing home inventories dwindled creating a sellers’ market in residential real estate. Bidding wars ensued and sellers had the upper hand in established neighborhoods. In new home communities, buyers found a broader selection, less restrictive buying terms, and more favorable pricing, thanks to builders’ incentives.
With mortgage rates stabilized for now, existing home inventories have improved and the real estate market has become fairly balanced. Buyers have more choices, in terms of both existing homes and newly built homes, and are wielding more negotiating leverage.
Builders in new home communities are upping their game, offering a variety of incentives for buying a home. Below we explore the latest trends in new home builder incentives, highlighting the unparalleled opportunities for prospective homeowners to capitalize on these offers. If you’re in the market for a new home in a vibrant community, read on to learn more about the types of builder incentives you might find!
Why Do Builders Offer Incentives for Buying a Home?
In an effort to boost sales, a significant number of home builders nationwide are offering incentives for buying a home. During the period from June 2024 through February 2025, roughly 60% of builders offered special and incentives like lower mortgage rates, assistance with closing costs, and complimentary upgrades. And, according to the National Association of Home Builders (NAHB), roughly one third of the nation’s builders lowered their home prices by an average of 5% during this period. Data shows this tactic is working: sales for new construction homes were up 2.6% last year (with 1.02 million units sold) while sales of existing homes fell 0.7% in 2024 to a 30-year low.
Builders are motivated to keep their inventory moving, particularly when they have an abundance of spec homes available. These homes, also known as inventory homes or quick move-in ready homes, are a priority for builders to sell in order to reduce “carrying costs” like utilities, maintenance and loan interest. These costs can accumulate significantly, making completed homes particularly ripe for deals as builders aim to minimize expenses. Moreover, the longer a spec home remains unsold, its value might depreciate due to wear and tear, urging builders to offer attractive deals to prospective buyers.
New Home Builder Incentives: Understanding Builder Offers
The respected builders at Hillwood Communities continue to come up with appealing offers to attract buyers. Builder incentives vary by market and depends on their company’s business model and financial strength. Here are some of the most common offers:
- Closing Cost Contributions: Builders that pay closing costs make their homes more accessible to a broader range of buyers, particularly those who may be first-time buyers or who are tight on cash. Typically this offer will be a fixed amount of cash that is applied to the buyer’s closing costs.
- Design Center Credits: These credits are a significant incentive for buyers looking to personalize or customize their new home to fit their own tastes and preferences. Whether it’s selecting premium finishes, opting for high-end appliances, or choosing custom cabinetry, these credits provide the financial flexibility to upgrade the home without impacting the buyer’s budget significantly.
- Below Market Interest Rates: Some builders have their own in-house mortgage companies. These builders, and others who collaborate with preferred lenders, can offer reduced interest rates to entice buyers to purchase. This can translate into considerable savings over the lifetime of a loan. This approach can significantly lower monthly mortgage payments, making home ownership more affordable, particularly in competitive markets where every opportunity to save (no matter how small) counts.
- Mortgage Rate Buydowns: Builders pay a portion of the buyer’s interest rate for a specific period (temporary buydown, like a 2-1 or 3-2-1 buydown) or for the entire loan term (permanent buydown). This lowers the buyer’s monthly payments in the initial years or throughout the loan. Some builders offer cash towards lowering the buyer’s interest rate. This incentive can be used with any lender.
- Interest Rate Locks: With fluctuating mortgage rates, builders sometimes offer the option to lock in a rate for a certain period. This guarantees the buyer a specific rate even if market rates increase, offering stability and predictability in monthly payments.
- Free or Discounted Upgrades: This builders’ incentive gives the buyer specific upgrades like a media room, office, or expanded outdoor living space at no extra charge.
- Appliance/Accessories Packages: Including essential appliances like refrigerators, washers, dryers, window treatments, gutters, and more can reduce the immediate expenses of furnishing a new home.
By providing these incentives, builders not only make their properties more appealing but also add value that benefits the buyer from the beginning, potentially leading to a more satisfying and customized homeownership experience.
New Home Deals: Financing the Dream
The journey to home ownership in a new construction community is often paved with unique financing opportunities. Beyond the traditional mortgage options, builders may offer specialized programs tailored to ease the financial burden on buyers. These unique financial tools are designed to provide peace of mind and financial flexibility to prospective homeowners, and can include examples like:
- Lease-to-Own Programs: These programs allow prospective buyers to rent a property with the option to purchase it in the future. This can be particularly advantageous for those building credit or saving for a down payment, providing a pathway to homeownership without the immediate financial commitment.
- Specialized Loan Programs: Builders may also partner with lenders to offer unique financing options tailored to the needs of new construction home buyers. These can include lower down payment requirements, loans that incorporate construction and permanent financing, or programs designed to assist first-time buyers.
New Construction Deals: Frequently Asked Questions
How much does it cost to buy down your interest rate?
Buying down your interest rate, commonly through points, varies in cost but typically equates to 1% of your loan amount per point. The actual cost and savings depend on your lender’s terms and how much you’re willing to pay upfront to lower your monthly mortgage payments.
How are home builder incentives in 2025 compared to 2024?
In 2025, builders are offering even more attractive incentives and offers as more pre-owned homes come on the market. Compared to 2024, builders are making more aggressive offers, such as price cuts on quick move-in homes, cash towards closing, and more significant upgrades, to attract buyers in a more competitive landscape.
What types of new home builder deals are available?
Available deals vary by builder but some examples are closing cost contributions, free upgrades (like premium materials or appliances), interest rate buydowns, flex dollars (which can be applied to your purchase in several ways), and special financing options. Some builders are also offering more unique incentives, such as extended rate locks and lease-to-own programs, tailored to ease the buying process and make new homes more accessible.
Exploring Your Homebuying Options in a Hillwood Community
As the real estate market continues to evolve, the opportunities within new home communities have never been more promising. With builders rolling out some of the best incentives seen in years, there’s no better time to explore your options. Whether you’re drawn to the idea of customizing your dream home or taking advantage of favorable financing terms, the path to homeownership is ripe with possibility.
As rates fluctuate and the world changes, the value of a new construction home in a vibrant lifestyle community remains a reliable source of potential value for years to come. We encourage interested buyers to immerse themselves in the experience – visit communities, tour model homes, and engage with our builders to discover the full spectrum of incentives available. In a market brimming with possibilities, communities like those developed by Hillwood offer a unique opportunity.
