Why Some New Builds Are Still In The Clouds

My wife and I are some of the lucky ones. We bought our house in 2021, right in the middle of that stretch of rock-bottom interest rates that felt almost too good to be true at the time. We bought in a new-build community, the kind that gets phased in over a decade instead of finished in a year. Our realtor sat us down before we signed anything and told us the truth we didn't really want to hear: if we ever needed to sell while the neighborhood was still being built out, it might be a tougher sell than we'd expect. Not because our house would be in bad shape, but because we'd be competing with brand-new homes going up a few streets over, built by a builder with every incentive in the world to move that inventory quickly.

Fast forward to 2026, and that's exactly what's playing out around the greater Austin area and some parts of the country.

I wanted to understand the "why" behind it, not just accept it as a vague market vibe, so I went looking for numbers. And the numbers are pretty telling. According to the NAHB/Wells Fargo Housing Market Index for July 2026, 63% of builders nationally are using sales incentives right now, and 37% are cutting prices outright, with the average price cut sitting around 6%. That sounds like relief for buyers, and in some ways it is. But dig one layer deeper and a different story shows up: research from John Burns Research & Consulting puts total builder incentives, meaning rate buydowns, design credits, and covered closing costs, at roughly 7-8% of a new home's sale price right now, compared to a historical norm closer to 3-3.5%. Some public builders are running even hotter than that. PulteGroup reported incentives eating up 10.9% of gross sales price in the first quarter of 2026 alone.

Here's the part that matters most: that money isn't coming off the sticker price. It's being funneled into the deal in ways that never touch the "sold price" that shows up in public records or gets pulled for comps. A 2-1 rate buydown, a free finished basement, $20,000 toward closing costs, an upgraded kitchen package thrown in "free." All of it makes the monthly payment more digestible for a new buyer, and all of it keeps the actual recorded sale price looking stable, even increasing, on paper.

Think about it like buying a new car. Dealerships rarely just slash the MSRP, because that permanently resets what the car is "worth" in everyone's mind, including the manufacturer's. Instead, they'll do 0% financing, free oil changes for a year, cover your first few payments. You drive away having genuinely saved thousands of dollars, but the sticker price never moved, and the next customer three months later is quoted that exact same number. Builders are running the identical playbook, and for good reason: they're often still selling out that same neighborhood five, six, ten years from now. Dropping the headline price on lot 12 makes lot 45 harder to sell later, and it can trigger appraisal problems across every home already sold in the community. Concessions let them protect the number while still closing the deal.

Which brings me back to our own situation, and probably a lot of yours if you bought early into a community that's still under construction. When you go to sell, you're not just competing with the resale market broadly. You're competing directly against the builder, who can offer a rate buydown or a design credit on a brand-new home with zero deferred maintenance, a full warranty, and the "new home smell" that resale listings can't manufacture. You can't easily match a 4.99% builder-subsidized rate as an individual seller. You'd have to discount your actual price to compete on monthly payment, or give a buyer’s concession towards financing, which means you eat the cost directly instead of burying it in financing structure the way the builder can.

It also messes with appraisals in a subtler way. Comps pull recorded sale prices, not the concession package layered underneath them. So, the "market" looks like it's holding steady even while builders are quietly discounting by high single digits or more. If you're appraising a resale home in a still-building neighborhood, you may be getting compared against contract prices that were never really the true, all-in price the builder accepted.

Then there are the states like the one I live in that have high property taxes. If you’re having to protest your property taxes with your county or parish you are again running comps of sold home prices of builder homes left inflated because of the ‘invisible’ behind the scenes closing incentives.

Now, none of this means buying in a growing new-build community was a mistake. We got a rate most people would kill for today, and we get a decade of a neighborhood building out in a way that still works for our family. But it's worth knowing, going in, that "resale value" in a community that's still under construction is a different animal than resale value in an established one. Our realtor was right. The incentives didn't disappear when rates went up. They just moved out of the headline price and into the fine print.

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-            Jude’s First Day of First Grade

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual or firm.