Incentives Now Move Two Thirds of New Home Sales

Two of every three builders now lean on incentives to sell a new home. The September NAHB/Wells Fargo Housing Market Index, released September 16, shows 66 percent of builders reporting sales incentives, up from 63 percent in August and the widest share the survey has recorded. The headline index fell three points to 32, a twelve month low, and our September 17 morning piece on the builder confidence drop covered it as a sentiment story. The premium question is what the incentive layer underneath does to the actual economics of building homes, and the answer is that a 6 percent headline price cut understates the real concession by a wide margin.

Key Takeaways Sixty six percent of builders use…