The NAHB/Wells Fargo Housing Market Index (HMI) survey conducted in May reveals that more than half of single-family builders are using incentives to bolster sales and/or limit cancellations. This is essentially the same share of builders that were providing incentives during normal market conditions in 2003. By contrast, the percentage of builders providing sales incentives was far higher during the Great Recession.
The May 2020 survey reveals that 48% of single-family builders are not using incentives to bolster sales and/or limit cancellations. This of course implies that slightly more than half, 52%, are using some kind of incentive to achieve that objective.
What specific incentives are they using? Figure 1 shows the complete list, but the three most likely are:
- Options or upgrades at no or reduced cost (19% of builders report using)
- Payment of closing costs or fees (19%)
- Price discounts/Margin reductions (18%)