Higher Mortgage Rates: What Sellers Need To Know

Higher mortgage rates don’t only impact homebuyers. They can also influence what it takes to successfully sell your home.

That’s because buyers today are keeping a close eye on affordability. When mortgage rates move higher, even a small increase can have a meaningful impact on their monthly payment. So, buyers are searching for ways to keep their costs manageable. And in some markets, newly built homes are giving them another option to consider.

If you’re thinking about selling, you can absolutely still compete. But it’s important to know how builders are attracting today’s buyers – and what you can do to make your home stand out, too.

Builders Are Finding Ways To Lower Monthly Payments

New construction has an advantage in today’s higher-rate market. While existing-home sales (homes that have been previously owned and lived in) continue to feel the pressure from higher mortgage rates, new-home sales have been holding up better.

In a recent interview, Logan Mohtashami, Chief Economist at HousingWire, explained that new-home sales have reached an 8-month high and are now running near 2019 levels. Existing-home sales, on the other hand, remain well behind that pace, coming in roughly 1 million sales below 2019 levels.

So, what’s helping builders compete? A big part of it comes down to incentives. According to Realtor.com, nearly 1 in 5 (18.8%) newly built homes are advertised with some type of buyer incentive upfront, giving buyers another way to make the numbers work:

One of the most common incentives may surprise you. As the graph shows, many builders are offering buyers lower mortgage rates, often through what’s known as a mortgage rate buydown.

With a rate buydown, the builder pays an upfront cost to help the buyer secure a lower mortgage rate – which can also mean a lower monthly payment. For buyers, that can make a new home more affordable. For builders, it can help move inventory. That’s why reduced mortgage rates are now advertised on 13.8% of new-home listings.

In some cases, builders are offering rates below 6% – and sometimes well below 6%. That could save a buyer hundreds of dollars each month, which can make a meaningful difference when affordability is already stretched.

How Can Today’s Sellers Stay Competitive?

First, keep in mind that mortgage rate buydowns aren’t just for builders. Depending on the loan and terms of the transaction, sellers may also be able to contribute toward a buyer’s rate buydown. But does that mean you need to offer one to compete? Not necessarily.

A rate buydown is just one strategy. Depending on your local market and the buyer, adjusting the price, helping with closing costs, making key repairs, or highlighting features that set your home apart from new construction may be more effective. That’s where having an agent who understands the competition in your area can make a difference. As Joel Berner, Senior Economist at Realtor.com, explains:

“Existing-home sellers are competing with new construction, so highlighting the benefits of an established neighborhood – like nearby amenities, convenience, and location – can help a home stand apart from new builds that may be farther outside town.”

A good agent should already be thinking this way. Understanding what makes your home unique – and making sure those features stand out in the listing – can help separate it from the competition. And sometimes, a little flexibility can go a long way. Being open to reasonable negotiations or offering the right concessions could make your home much more appealing to today’s buyers.

Today’s Market Favors Flexible Sellers

Builders have also been more willing to adjust their prices based on what today’s buyers can afford and where demand is strongest. In some markets, that flexibility is creating additional competition for existing-home sellers. As Robert Dietz, Chief Economist at the National Association of Home Builders (NAHB), explains:

“In other words, existing-home sellers now have to adjust to what buyers are actually willing and able to pay – something builders have been doing for the past several years.”

That’s an important takeaway if you’re thinking about selling.

It doesn’t mean you have to dramatically lower your price or offer a major concession. But it does mean your pricing and marketing strategy should reflect what buyers can afford today – not what homes were selling for a few years ago.

And every market is different. New construction may be a major source of competition in some areas and barely a factor in others. Builder incentives can vary significantly, too. That’s why working with a local agent who understands what you’re competing against can help you position your home effectively.

Bottom Line

Higher mortgage rates have buyers paying closer attention to affordability, and builders are responding with incentives designed to make their homes more attractive.

If you’re planning to sell, you don’t necessarily need to match what builders are offering – but you do need to understand your competition. A local agent can help you price, position, and market your home based on what today’s buyers are actually looking for and can afford.

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