Incentives are driving potential buyers
Two of the country’s largest homebuilders, D.R. Horton and PulteGroup are investing in incentives for buyers. Mortgage rate buydowns, covering closing costs and overall price cuts can help close the sale for potential buyers. Both builders saw a jump in orders in Q1 of 2026, 11% for D.R. Horton and 3% for PulteGroup.
However getting these buyers to the door are costing the builders in earnings results. Net income attributable to D.R. Horton for its second fiscal quarter decreased 20%. While PulteGroup reported its home sale gross margin was 24.4%, compared with prior year gross margin of 27.5%. However, neither are planning on cutting these incentives soon.
“New-home demand remains impacted by affordability constraints and cautious consumer sentiment, said D.R. Horton CEO Paul Romanowski. “Our sales incentives increased during the second quarter, and we expect incentives to remain elevated for the rest of the year, with the level dependent on demand, mortgage interest rates, and other market conditions.”
“Our ability to offer low fixed-rate mortgages and other incentives is certainly helping solve the affordability riddle for some,” said PulteGroup CEO Ryan Marshall. “But this comes at a price, as incentives in the quarter reached 10.9% of gross sales price.”
The use of these incentives may draw some short term headwinds, but they keep builder momentum in the market.
