Next Sunday, Taylor Morrison’s Denver division expects to wrap up a month-long promotional campaign that has offered 50% off the regular price of the builder’s most popular floor-plan options, including kitchen upgrades, enhanced elevations, and three-car garages.

While much has been made lately about how rising prices for new homes are further proof of a recovering housing market, the facts are not as black and white as they might appear. Over the past few months, several builders have told this reporter that increases in their houses’ average selling prices are as related to shifts in their companies’ product mixes to bigger, more-expensive homes as they are to price appreciation.

And while genuine price appreciation is evident in certain markets, discounting and other incentives used to induce sales aren't disappearing entirely, either. On its website, Houston-based CastleRock Communities is currently advertising “rock bottom deals” that reduce prices on a handful of houses in four Texas markets by anywhere from a couple hundred dollars to $19,000. (CastleRock also increased prices on some of the homes listed.) “In Texas, [discounting is] still fairly common, especially by the public builders,” observes Tim Gehan, CEO of Dallas-based Gehan Homes, which through March 31 is offering 50% off of elevation upgrades and decorator options in all five of its Texas markets.

VA and FHA loans account for about 80% of all mortgages in Columbus, Ga., home to Fort Benning. So down-payment assistance “is still a critical ingredient” in any sale, says David Erickson, president of Grayhawk Homes there. Grayhawk offers its buyers $5,000 to cover any closing-related expense, such as fees for appraisals or attorneys. “This is a very common incentive” among all builders in this market, says Erickson. “And it’s all priced into the cost of the house.” In fact, Grayhawk might lose as many as one-third of its sales in Columbus to competitors if it didn’t offer this assistance, says Erickson.

Prices for existing homes in Denver rose by 8.5% in 2012, according to the S&P/Case-Shiller Home Price Index. And the median new-home price in February 2013, at $359,200, was 6.1% higher than the same month the year before, according to Metro Study, a division of Builder's parent company Hanley Wood. In that market, Taylor Morrison homes are priced from the mid $300s to $700,000. The builder, which is based in Scottsdale, Ariz., has been running promotions on options for the past few years in Denver, “with the intention of building a bigger backlog” for the spring and summer selling seasons, explains Brian Cartwright, president of the builder’s nine-community Denver division. Indeed, some buyers “have been pretty surprised” that Taylor Morrison is still offering these deals, which Cartwright says “open up” the availability of more-expensive options to customers.

However, Cartwright says that incentives as a way of spurring sales “are fading,” and that Taylor Morrison is “looking to back off” from them in the future. Coincidentally, the builder’s 50% off options deal follows the introduction of its Interactive Home system at its Silverleaf community in Broomfield, Colo. That system allows home buyers to control multiple devices—TVs, thermostats, door locks, and so forth—with a user interface such as a smartphone. Cartwright says the company intends to expand that system to homes in other communities in Denver.

John Caulfield is senior editor for Builder magazine.

Correction: When this story was first published, it misidentified Brian Cartwright, Taylor Morrison's Denver division president.

Learn more about markets featured in this article: Denver, CO, Dallas, TX.