With the average mortgage rate approaching 6%, American homebuyers are looking at the most affordable monthly payments in a year. But San Antonio real estate agent Tavyn Weyman knows how to get them lower – much lower.
The trick is simple: buy a new one.
In markets across the United States, homebuilders sitting on unsold inventory are subsidizing mortgage rates so heavily that they sometimes rival record lows last seen during the Covid-19 pandemic. That’s in addition to benefits like free appliances, finished basements and no closing costs.
Weyman said a major private builder just gave a customer a flat rate of 3.49% on a $414,000 home on the city’s west side. The sales agent even increased Weyman’s commission to cover the cost of breaking the buyer’s lease and threw in another $2,000 to make the first month essentially free.
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“You want to pay $2,000 a month for a brand new four-bedroom house and have a 2% rate, I can find that out now — as crazy as that sounds,” Weyman said. “It’s all negotiable.”
A single mother moving from Florida is interested in a 3.99% fixed interest rate offered by DR Horton Inc., the largest U.S. builder by market cap. But it is the introductory rate of less than
These are not the benefits of a healthy housing market. It’s the tactic of an industry trying to get buyers’ attention as tariffs, a government shutdown and artificial intelligence contribute to feelings of job insecurity.
According to outplacement firm Challenger, Gray & Christmas, more than 1 million jobs have been cut so far, the most since the pandemic. Last month alone, companies announced 153,000 cuts, the highest number in October since 2003.
The fear is taking the wind out of a predicted jump in homebuyer demand as mortgage rates fall.
“We expected a little bit more of an increase due to the reduction in mortgage rates that we’ve seen,” DR Horton CEO Paul Romanowski said on a call with analysts last week. “It’s really choppy.”
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Other builders have shared disappointing feedback from the market. Century Communities Inc. said in an earnings call that demand is especially weak from first-time buyers. According to PulteGroup Inc. orders for new buyers fell 14% in the last quarter compared to a year earlier.
“Lower interest rates are positive for housing demand, but interest rates don’t work in a vacuum,” PulteGroup CEO Ryan Marshall said in an earnings call last month. “There is a clear offset as interest rates fall as the economy slows and people worry about their jobs.”
A major obstacle for new sales agents is that renting is now much cheaper than buying. Rents are starting to drop and landlords are reporting this
Meanwhile, there are no longer any shortages of resale offers, leaving buyers with plenty of other options. Yet few bite. Pending sales stagnated in September, still barely above record lows.
“The existing market is a much more formidable competitor for homebuilders than it has been for a long time,” said Mark Zandi, chief economist at Moody’s Analytics. “There’s a lot of fear about job security as there’s no hiring. And artificial intelligence is coming.”
For the first time, the price for a typical new home was cheaper than that of an existing home in July and August, according to a John Burns Research & Consulting analysis of data from Census and the National Association of Realtors. The average premium since 1973 was 16%. No incentives were included in the analysis.
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Production builders spent an average of 7.5% of sales prices on incentives in the three months ending in August, up from 4.8% in May 2024, according to the company’s builder surveys.
“There is an opportunity to buy new homes at very low rates,” said Eric Finnigan, vice president at John Burns. “The big surprise is why sales are still so weak.”
But not all interest rate buydowns are equal. Some permanently reduce financing costs for a full 30-year term, while others only keep interest rates low temporarily. These deals can work well for households expecting rising income or future refinancing, but pose real risk for borrowers who aren’t prepared for the jump in monthly payments once the promotional period ends.
Lennar Corp. is conducting a national inventory
The strategy to undermine the resale market appears to be working, at least according to Weyman. The San Antonio real estate agent said seven of the eight homes he sold this year were newly built.
“New home buyers expect a lot of things, so you have to get them more,” Weyman said. “I always advertise that I will never charge a client for closing costs, especially now.”