In order to encourage home sales and limit cancellations, home builders are reducing prices and offering unconventional incentives at a quickening pace, but today’s rising concessions pale in comparison to the deals and price cuts offered during the 2007-2008 Great Recession. Roughly 36% of all single-family home builders reported reducing their prices in November 2022, and while that’s a relatively high share, it’s still far lower than the peak 59% of builders forced to drop prices in October 2007, NAHB reports.
The average reduction was 5% in July 2022, and 6% in three subsequent surveys conducted through November, but during the 2007-2008 housing crisis, the average monthly home price reduction was consistently 7% or higher with a peak of 10% in February 2008.
Meanwhile, the use of sales incentives (price discounts, free upgrades, etc.), which continue to be a standard business model for many home builders, has been on the rise in recent months. For a historical perspective, when NAHB first put this question to builders in May 1995, 74% reported offering sales incentives. The percentage never fell below 50 until July 2022, when it dipped to 43.
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