In the suburbs north of Austin, Texas, builders are cutting prices so aggressively that some signed contracts are falling apart. Affordability and high interest rates still play a role. But Ahmad Homidi, a real estate agent with eXp Realty, says the pattern he is seeing right now is different. Buyers back out after a competing builder nearby drops its price below the one they already agreed to.
That sounds like good news for buyers. But Homidi says buyers who negotiate only on price may miss out on significant savings. Homidi focuses on new construction in the North Austin suburbs. Roughly 60 percent of his practice is in new construction sales across a corridor stretching from Leander and Georgetown through Pflugerville and Hutto.
Builder incentives in North Austin include price reductions, closing cost credits, interest rate buy-downs, and flex cash. Many buyers negotiate only on the sticker price and overlook the rest. Right now, each of these categories is negotiable. Homidi says buyers benefit from knowing “all the different levers that you can pull as far as incentives.”
The gap can be large. Homidi cites a pending sale of a million-dollar home. The buyers first negotiated directly with the builder and secured $150,000 in savings. Before they signed, other incentive categories were added to the package, bringing total savings to $240,000. The added $90,000 came from incentives the buyers had not used.
The incentives reflect a market under pressure. Home prices in the Austin suburbs are coming down, and interest rates around 6.8 percent have strained affordability. Homidi says “builders are willing to negotiate on incentives” right now.
He describes a pattern that follows. A buyer signs a contract with one builder. Then a rival builder in the same area drops its prices further. The buyer tries to renegotiate with the original builder. If that builder will not renegotiate, some buyers back out to take the better deal.
“What I’m seeing right now is it’s opportunity loss,” Homidi says. “Somebody gets locked into a contract and then the builder across the street, to compete, lowers their price even more.” As a result, having more options can make individual deals less stable.
Flex cash is one incentive buyers may overlook. It is a lump sum from the builder that the buyer can use as they see fit. Buyers can put it toward design center credits, closing costs, a mortgage rate buy-down, or a combination.
A buyer who doesn’t need help with closing costs might put the full amount toward a rate buydown, which can lower the monthly payment. A buyer who wants specific finishes might split the cash between the design center and closing costs. The structure varies by builder. Builders across the area are using flex cash and similar incentives to attract buyers.
The competitive pressure extends beyond new construction. Across the North Austin suburbs, homes are staying on the market longer than they were a year ago. According to Homidi, average days on market rose from roughly 63 to about 68. Those numbers were already elevated before the increase.
Homidi says the homes that sell fall into three groups. The first is new construction. The second is homes priced competitively from day one. The third is resale homes prepared to look like model homes, backed by professional photos, video content, and a full marketing plan. Sellers who list above market value to test buyer interest see their listings stall.
“If you don’t price it right from day one, the home continues to sit on the market, is what the data is showing,” Homidi says.
Homidi says interest rates are what’s holding many buyers back. Many homeowners hold mortgages at roughly 3 percent. They do not want to sell and replace that rate with one near 6.8 percent. This lock-in effect limits both the supply of homes for sale and how often homes change hands.
If rates drop into the 5 percent range, Homidi expects sidelined buyers and rate-locked homeowners to return to the market. He expects activity to return to levels last seen in 2022, citing pent-up demand. Today’s six-figure incentive packages reflect current conditions, not a permanent feature of the market.
About the Expert: Ahmad Homidi is a real estate agent with eXp Realty who focuses on new construction in the North Austin, Texas corridor.
This article is intended for informational purposes only and does not constitute legal, financial, or investment advice. The views and opinions expressed herein reflect those of the individuals quoted and do not represent an endorsement of any company, product, or service mentioned. Readers should conduct their own due diligence and consult qualified professionals before making any investment decisions.
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