Builders: Today’s Rate Cut Is Tomorrow’s Sale
Home builders have an exceptional sales opportunity following the Jan. 22 three-quarters of a percentage point interest rate cut by the Federal Reserve. Mortgage rates are already near historic lows, and the largest rate cut since October 1984 makes buying a new home a not-to-be-missed decision for consumers right now.
Home builders should use the cut to send a critical message to potential buyers: Those who commit to a new home today will get extraordinary value for their dollar.
Whether they choose to add more features or upgrades, or help their budget with lower monthly payments, the power is in their hands to purchase a home that meets their needs.
“Today’s rate cuts by the Federal Reserve had an immediate effect on prime mortgage rates,” said David Seiders, NAHB’s chief economist. “Fixed-rate conventional conforming mortgages now are available around 5.3%, which is extremely low by historical standards.”
Builders can make a positive, immediate impact on their sales by coaching their sales teams to show potential buyers how the rate cuts benefit them.
Demonstrate to potential buyers that a rate cut almost always provides a significantly greater cost savings over the life of the loan than a drop in price. Buyers who wait for prices to go down will most likely end up losing money overall if rates go up even one-half of a percent. Trying to time the market is a dangerous gamble that could end up costing them thousands of dollars.
For example, a buyer who gets a 30-year fixed rate mortgage for $400,000 at 5.3% today will spend $20,520 less overall than someone who got a better price — say $380,000 — but with a rate at 6%.
NAHB members can also help pick up their sales by leveraging the wide selection of promotional materials available to them at www.nahb.org/buynowcampaign. The materials in the Buy Now Promotional Toolkit carry a compelling “Buy Now!” message, supported with the fundamental fact that low interest rates, great selection and readily available funds make today an ideal time to buy a home. They are ready for immediate use and can be customized or used as-is.
Some of the materials include consumer handouts with topics such as “Top Ten Reasons You Shouldn’t Wait to Buy a New Home,” and five new consumer print advertisements with messages such as “Smart shoppers know: It’s a great time to buy a new home.”
For more information, e-mail NAHB Public Affairs, or call 800-368-5242 x8254.