H
omebuilders are using creative incentives to attract buyers, particularly those seeking entry-level homes, as interest rates remain high. Tri Pointe Homes is offering 30-year fixed-rate mortgage buydowns for some homes in Austin and Dallas. For example, some homes near Austin will have a first-year rate of 4% with the remainder at 5.5%, while some Dallas homes offer a 3% first-year rate.

    This strategy allows builders to give buyers more affordability without reducing home prices. However, it comes at a cost: Lennar spent an average $53,400 in sales incentives per home delivery in Texas in the third quarter, up 8% from last year. Tri Pointe's Austin division president, Bryan Havel, notes that the challenge is not the price, but affordability with mortgage rates.

    In addition to buydowns, builders are using forward commitment agreements with affiliated lenders to offer lower interest rates. This strategy allows them to sidestep seller concession caps and provide more incentives to buyers. Industry leaders expect continued demand for new homes next year, despite high interest rates, which remain the industry's greatest challenge.

    Tri Pointe is developing several communities in Texas, including Park Central in Georgetown, Lagos Reserve in Manor, and Flora in Hutto. The firm started groundwork on Park Central last July and expects sales to begin early next year. Tri Pointe is also buying finished lots from other developers to sell homes at the Flora community.