If you’ve been waiting for rates to drop before you buy, I hear you! Rates have been hovering near 7% this fall, and that’s a real number when you’re trying to make a monthly payment work.
Here’s the good news – new construction is one of the most negotiable corners of the market right now. Builders have homes to move, and many of them are paying real money to help buyers get into them. You just have to know what to ask for.
This guide walks through what’s happening with new construction right now, the incentives builders are offering, and how to make sure you actually come out ahead.
What’s Happening with New Construction Right Now
New home sales picked up in August, but there are still plenty of homes on the market – and that gives buyers leverage.
| What we’re watching | Latest number |
|---|---|
| New home sales, August 2026 | 684,000 annual pace, up 6.4% from July |
| Median new home price | $393,700, down 5.8% from a year ago |
| New homes for sale | 483,000 – about 8.5 months of supply |
| Builders cutting prices (September) | 38%, up from 35% in August |
| Builders offering incentives (September) | 66%, up from 63% in August |
A few things stand out to me:
- Prices have come down. The median new home price is about 14.5% below its October 2022 peak.
- There’s inventory to choose from. Around 6 months of supply is usually considered balanced, so 8.5 months tips things toward buyers.
- The South is where sales grew. August gains came from the South and Midwest, while the Northeast and West slipped.
- Builders are feeling it. Builder confidence fell to 32 in September, its lowest in a year. Among builders who cut prices, the average cut was about 6%.
The big national builders are leaning in too. Lennar said its average sales price of $372,000 last quarter reflected about 12% in incentives, plus base price adjustments.
The Incentives Builders Are Offering
Most builder deals fall into a few buckets. Many builders will let you mix and match, especially on homes that are already finished.
Mortgage rate buydowns. The builder pays to lower your interest rate. There are two main kinds:
- Permanent buydown – your rate is lower for the life of the loan. For example, Perry Homes in Texas has been advertising a 4.99% 30-year fixed rate on select homes.
- Temporary buydown (2-1 or 3-2-1) – your rate starts lower and steps up each year until it reaches the full rate. A 2-1 buydown is 2% lower in year one and 1% lower in year two.
Closing cost help. The builder covers some or all of your closing costs. Closing costs usually run 2% to 5% of the purchase price, so this can save you a lot of cash up front.
Flex cash. This is money you get to decide how to use – toward closing costs, a rate buydown, upgrades, or a lower price. D.R. Horton ran a promotion this summer with up to $35,000 in flex cash on select move-in ready homes.
Upgrades and extras. Design center credits, appliance packages, blinds, landscaping, even a generator. These are nice, but cash usually goes further than a design credit – builder upgrade pricing has a healthy markup built in.
Price reductions. Sometimes the simplest deal is a lower price. More builders are cutting prices now than they were this spring.
One important thing to know – the richest incentives are almost always tied to using the builder’s own lender. That can still be a great deal, but it’s worth comparing (more on that below).
Rate Buydown or Price Cut – Which Saves You More?
For most buyers watching their monthly payment, a rate buydown moves the needle more than a price cut. Here’s a simple example on a $400,000 home with 10% down:
| Scenario | Loan amount | Rate | Monthly principal & interest |
|---|---|---|---|
| No incentive | $360,000 | 6.95% | $2,383 |
| $20,000 price cut | $342,000 | 6.95% | $2,264 |
| Builder buydown to 4.99% | $360,000 | 4.99% | $1,930 |
The price cut saves about $119 a month. The buydown saves about $453 a month. That’s because a price cut only trims the loan balance, while a buydown lowers the interest on the whole loan.
A few things to keep in mind:
- A buydown that big usually costs the builder more than $20,000. Always ask what the incentive is worth in dollars so you can compare apples to apples.
- Think about how long you’ll stay. If rates drop and you refinance in a couple of years, you lose the benefit of a permanent buydown. A price cut stays with you either way, and it helps your equity from day one.
- Your property taxes and insurance aren’t in these numbers. A lower price can trim those a little too.
There’s no one right answer – it depends on your budget, how long you plan to stay, and how much cash you have for closing. That’s exactly what we sit down and work through together.
How to Win Big on New Construction
- Look at move-in ready homes first. Finished homes cost builders money every month they sit. Those “quick move-in” homes often get the strongest incentives, and you know exactly what you’re getting.
- Watch the calendar. Builders have quarterly and year-end goals. The end of a quarter (late March, June, September, December) is often when the best deals show up.
- Ask for flexibility. If the builder offers flex cash, ask whether you can put it toward a rate buydown, closing costs, or price – whatever helps you most.
- Compare the builder’s lender with an outside lender. The builder’s lender usually unlocks the biggest incentive, and that’s often worth it. But get a second quote so you can see the full picture, including fees and the APR.
- Get your own agent involved from the very first visit. The sales rep at the model home works for the builder. Having your own agent costs you nothing in most cases, but many builders require us to be there (or registered) on your first visit.
- Still get an inspection. New doesn’t mean perfect. I always recommend an independent inspection, and on a to-be-built home, a pre-drywall inspection too.
- Read the fine print. Most incentives have a contract deadline and a closing deadline. Make sure the timeline works for you before you sign.
Questions to Ask the Builder Before You Sign
What incentives are available on this specific home, and what are they worth in dollars?
Do I have to use your lender to get them? What do I get if I use my own?
Is the rate buydown permanent or temporary? What will my rate be in year three?
How long has this home been finished, and how many unsold homes are left in the community?
Can the incentive be used toward closing costs, price, or the rate – or only on upgrades?
What are the deadlines to sign and to close?
What does the builder’s warranty cover, and for how long?
Are there HOA dues, and what do they include?
Ready to See What’s Available?
Incentives change month to month and community to community, and the national numbers don’t always match what’s happening here in the Tri-Cities. I keep an eye on what local builders are offering so you don’t have to.
If you see something you like – or you just want to talk through whether a buydown or a price cut makes more sense for you – give me a call. I’m happy to help you run the numbers before you ever step into a model home!
Alexa Frado, Ridgeline Property Group Direct: 423-484-3084
YourTricitiesRealtor.com
References
U.S. Census Bureau & HUD – Monthly New Residential Sales, August 2026 (Sept. 24, 2026)
First Trust – August New Home Sales (Sept. 24, 2026)
ABA Banking Journal – New Home Sales Gain in August (Sept. 24, 2026)
Trading Economics – NAHB/Wells Fargo Housing Market Index, September 2026 (Sept. 16, 2026)
The Close – Builder Incentives Rise as Mortgage Rates Near 7% (Sept. 18, 2026)
Lennar – Third Quarter 2026 Results (SEC filing) (Sept. 16, 2026)
Houston Prime Realty – Houston New Construction Incentives, September 2026 (Sept. 8, 2026)
D.R. Horton – “New Homes. Now Ready.” Flex Cash Promotion (August 2026)
Zillow – Builder Incentives Explained
Payment examples are principal and interest only, for illustration. They don’t include taxes, insurance, HOA dues, or mortgage insurance. Talk with a lender for numbers specific to you. Builder incentives change often and vary by community.
