Ways Buyers are getting below market interest rates, Part 2 of 3: Builder Spec Inventory.

The second way you can buy a home today at below-market interest rates.is by buying new construction spec homes.

Yes, you can get a really good deal right now on a brand-new home. 

Builders are heavily incentivizing their spec homes right now. I’m recording this video towards the end of 2023 and Q4 tends to be a really good time to buy builder spec homes in general. But this year there are some additional advantages. 

First, just like any other year, builders want to get things off the books before the end of the year. They don’t like to carry liabilities over to the new year and prefer to close out any finished inventory ASAP. 

This year there’s a little more in it for buyers because builder confidence is back down for the third month in a row, based on the NAHB/Wells Fargo Housing Market Index. Builders are highly reactionary and now is the time to take advantage of the negative outlook and end-of-year timing.

A lot of builders are offering extremely reduced interest rates to lure buyers in. It’s working. The Mortgage Bankers Association is consistently reporting that new home purchases have had eight consecutive months of annual gains. And at the same time, mortgage applications in the general market are seeing drastic declines.

I have seen some builders go as much as 10% off the list price of a home to get it sold. So not only could you get a great price but you could also use the credits a builder is willing to give to buy down your interest rate too. So you get a double benefit by getting a lower price and a reduced interest rate.

Now be careful with this. Many of these introductory rates are just that, introductory. Meaning they’re going to change at some point during the term. Rarely are these permanent rate buy-downs.

So be sure to ask the builder’s lender about this. And however they respond, ask them to show you where it says in the documentation that this is a temporary or a permanent rate.

I promise you don’t want any surprises in this!