According to the latest NAHB/Wells Fargo Housing Market Index survey data, about 22% of builder respondents cut their home prices in April 2020, with the intention of bolstering sales or warding off cancellations.
Historically, this share is less than half of the share of builders who cut prices in the last recession: 52% of builders cut prices in May 2007, and 49% cut prices in March 2008.
Builders who did reduce home prices in April 2020 cut them by an average of 5%. That discount is smaller than the average price cuts in both May 2007 (7%) and March 2008 (8%).
Only 12% of builders think price discounts are “very effective” in bolstering sales/limiting cancellations. A majority of builders — 58% — believe they are “somewhat effective,” and 17% report they are “not at all effective.” The remaining 13% are not sure about the effectiveness of home price reductions.
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