The spring homebuying season is in full swing. But what is typically the busiest time of year for homebuilders has not lived up to the hype in 2025.
As builders struggle to close sales, resulting in declines in builder confidence and in company revenues, many have started to pile on buyer sales incentives.
According to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) 34% of builders in May reported cutting home prices and 61% reported using sales incentives.
Among others, these incentives include “green” features at free or reduced costs, help in selling an existing home, closing costs payoffs, mortgage rate buy-downs, job loss protections and giveaways.
Another recent survey of small, private builders conducted by BTIG and HomeSphere found that in April, 18% reported lowering most or all of their base prices. One-third of respondents increased some, most or all of their sales incentives. The report called this uptick in incentives “anti-seasonally high.”
“They have been high all spring and the builders that we are talking to continue to expect them to be high,” said Carl Reichardt, BTIG’s managing director and homebuilding analyst.
“Typically, seasonally, we would see incentives start the spring low and start moving up as we get into the slower months in later summer and into the fall. But instead, incentives started the spring high and they have continued to stay high.”
Historic data from the NAHB reflects this trend of higher incentive use during periods of slower market activity.
In 2008 and early 2009, 44% to 72% of builders surveyed reported using tactics like free or reduced-cost upgrades, closing cost credits and home-price reductions to help them offload inventory during the Great Recession.
A decade later, in April 2019, during in a much stronger market, these same strategies were only being utilized by 26% to 32% of respondents.
Considering that the new construction sector entered the Great Recession with over 1.5 million unsold new homes, compared to just 503,000 in March 2025, sales incentive usage that falls in the upper range of the 2008-2009 data is concerning.
“The current vibe is a lot of hesitancy among buyers because they are seeing a lot of shifts back and forth in policy, worrying about what is going to happen with rates, home prices, jobs and a zillion other things,” said Jody Kahn, the senior vice president of research and surveys at John Burns Research & Consulting.
Sweetening the deal
As builders look to offload some of their built-up inventory, homebuyers are not the only ones being incentivized. In some markets, builders are advertising higher-than-normal buyer agent commissions and even bonuses.
“We typically have a scaled program where if a Realtor sells one house in our community, we typically pay a 3% commission, but if they sell more within a given time period, sometimes there’s some bonuses or additional commission,” said Justin Webb, the founder of Rockwall, Texas-based homebuilder Altura Homes.
“We have seen some of the big national companies like Lennar, D.R. Horton and PulteGroup offer even larger sales commissions to Realtors as a marketing tactic to attract more buyer traffic.”
According to Webb, about 80% of his firm’s sales include an outside buyer’s agent.
While the NAHB does not have any current commission data, the average sales commission on a newly built single-family house in 2019 was $18,105 (or 3.7% of the purchase price).
The highest sales commission rate recorded by the NAHB was 4.3% in 2007, prior to the onset of the housing crisis. And RealTrends data shows that in 2019, the average total commission split between sell-side and buy-side agents was 4.96%, or approximately 2.48% per agent.
The elevated commission rates offered by builders are widely known in the agent community. In a recent edition of the Harris Real Estate Coaching podcast, hosts Tim and Julie Harris listed these commissions as a perk of working in new construction.
“Builders already account for your commission,” according to the episode notes. “There’s no awkward negotiation — just focus on providing value and getting your buyers into contract. Some builders are paying significantly higher commission rates for certain homes or communities.”
Questionable choices
But in light of the business practice changes resulting from the National Association of Realtors‘ (NAR) commission lawsuit settlement, agents should be thinking twice before accepting any bonuses or excess commissions.
Per the settlement, prior to going on a home tour, buyer’s agents must have their client sign a buyer broker agreement that outlines how much the agent will be paid upon the successful closing of a sale.
This agreed-upon compensation must be “objectively ascertainable and not open-ended.” Additionally, “a Realtor may not receive compensation for brokerage services from any source that exceeds the amount or rate agreed to in the agreement with the buyer.”
While buyers and their agents can amend or create a new buyer broker agreement, former NAR general counsel Lesley Muchow clarified on an episode of the “Real Estate Insiders Unfiltered” podcast that agents cannot amend buyer agreements simply to gain a larger commission.
“Our guiding lights on amendments are making sure that you are acting in good faith and making sure there is a business justification for the amendment,” Muchow said. “It should not be simply for the purpose of matching an offer of compensation from a seller.”
Despite this caveat, analysts say that builders are continuing to offer large commissions and volume bonuses to buyer’s agents.
“Builders are still doing it,” said Stephen Kim, the senior managing director and head of Evercore ISI‘s housing research team. “They are starting to ratchet back actual bonuses as some of them are starting to realize that buyer’s agents aren’t supposed to accept them, but it has been very slow.”
If builders catch on and stop offering large commissions or agent bonuses, Kim believes they’ll continue helping with buyer broker fees with a closing cost credit.
Future of incentives
In Northeast Ohio, where buyer demand remains strong, eXp Realty agents Kelsey and Andy Wozniak are seeing some builders that are unwilling to help cover a buyer broker’s compensation.
“With ones that are offering it, it is quite easy and they are very forthcoming, but the ones that aren’t, you kind of have to pull the information out,” Andy Wozniak said. “I had one recently tell me that I wouldn’t like the answer, and it turned out they were only offering a couple hundred dollars.”
The Wozniaks said they work with a mix of national, regional and local homebuilders, selling everything from custom homes to entry-level tract housing.
When a builder is unwilling to cover all of their compensation, the Wozniaks said their buyers are covering the remaining balance out of pocket.
“It is important to have those conversations with clients ahead of time, especially right now, so they have that understanding and know what they can expect if they go with new construction,” Kelsey Wozniak said.
Andy Wozniak added: “It does vary across the board, but for the most part they are very cooperative, helpful to our clients and easy to work with. If the market slows, I think they would do even more for buyers to try and move the needle, and get homes to sell as quickly as they currently are.”
Looking ahead, analysts believe that builder woes are going to continue.
“The front half of the year is really critical for the builders, not just with selling but also building their backlog of homes. So a weak spring season, which is what we are having, is not a good sign for the full year for the builders,” said Kahn of John Burns.
JKDS is a licensed New York State real estate brokerage firm. #10351200205