How to Ease the 7% Mortgage Rate When You Buy a New Home: Builder Incentives
Mortgage rates crossed 7% this week. That hasn't happened since January 2025. Here is what it means if you want to buy a new home, townhouse, or condo in Massachusetts.
Bob Wiltse, REALTOR®
September 25, 2026
The number
On Thursday, Freddie Mac said the average 30-year mortgage rate hit 7.03%. Last week it was 6.95%. A year ago it was 6.30%.
Rates have gone up five weeks in a row, WRE News reports. The 15-year rate rose too, to 6.42%.
Why? Last week the Federal Reserve raised its key rate by a quarter point. It was the Fed's first move this year, according to NPR. Bond markets are nervous about rising prices. When that happens, mortgage rates climb.
What it costs you
Say you borrow $600,000. That is a normal loan for a new home in much of Greater Boston.
At 6.30% (a year ago): about $3,714 a month for principal and interest
At 7.03% (today): about $4,004 a month
That is almost $290 more every month. Over a year, that is close to $3,500. Same house. Same loan. Just a higher rate.
(Payment figures are my own math: 30-year fixed, principal and interest only.)
New homes are still selling nationwide
Here is the surprise. New home sales went up in August.
The U.S. Census Bureau says builders sold new homes at a pace of 684,000 a year. That is 6.4% more than July but still 2% lower than a year ago.
Prices came down. The typical new home sold for $393,700. That is 5.8% less than last August, HousingWire reports.
But not here
The Northeast told a different story. New home sales in our region fell about 36% from July to August. They are down about 21% from a year ago, according to RISMedia's review of the Census data.
Why is New England behind? Here are a few likely reasons:
Land costs more here. Lots are small and expensive.
Local rules move slowly. Many projects need permits, hearings, and reviews.
Fewer big builders. Small local builders can't offer the big discounts national builders can.
The builder's secret weapon: rate buydowns
A "buydown" is simple. The builder pays money up front to lower your mortgage rate, sometimes for a few years, sometimes for the whole loan.
Buydowns are everywhere right now.
About 2 out of 3 builders used sales deals in September, says the National Association of Home Builders (via National Mortgage Professional).
About 38% of builders cut prices. The average cut was 6%.
Cotality economist Selma Hepp says 80% to 90% of new home sales now need a buydown to work (HousingWire).
What does a buydown save? On a $600,000 loan, cutting the rate from 7.03% to about 6.03% drops the payment to about $3,609, almost $400 a month saved. (My own math.)
Tip: A used home seller rarely offers a deal like this. A builder often will. If you are shopping, always ask: "Do you offer a rate buydown or closing cost help?"
For a small Massachusetts builder (2-10 homes per project) the pattern might be:
Incentive | Small MA builder, 2–10 homes |
Closing-cost credit | Very common / easiest |
Credit toward mortgage points | Common and negotiable |
Temporary 2-1 buydown | Increasingly common |
Permanent rate buydown | Available, but usually negotiated |
Advertised below-market mortgage rate | Less common |
Builder-owned/captive mortgage company | Rare |
Price reduction on completed spec | Common when inventory sits |
Who builds the homes? Not enough people.
Rates are one problem. Workers are another.
About 1 in 4 construction workers in Massachusetts is an immigrant. Tighter federal immigration rules have left some job sites short on crews, the Boston Globe reports.
The Home Builders and Remodelers Association of Massachusetts says that for every 5 workers who retire, only 2 join the trades (Boston.com).
The same group says the worker shortage adds about 2 months to building a single-family home. That delay costs builders $4,000 to $5,000 per house. Buyers end up paying some of it.
Projects to watch
Even with high rates, builders are still moving ahead around the state:
Franklin: A plan for 39 condos at 202 Washington St. goes back before the Zoning Board of Appeals on Oct. 1. The board wants more detail on water, sewer, drainage, and tree removal (Worcester Business Journal).
Raynham: Larkwood is building 138 condo townhomes along the Taunton River near Route 24 and I-495.
West Bridgewater: Cochesett Estates has released Phase 3, with duplex-style condos and single-family homes.
Avon: Joanna Hills is coming soon, with single-family homes, duplex-style units, and condos.
(Raynham, West Bridgewater and Avon details from builder listings on Homes.com.)
The big picture
Massachusetts built more than 34,500 homes in 2025, the state housing office says. The goal is 222,000 new homes by 2035. That means about 22,000 a year, every year.
The state is on pace for now. But 7% rates, high costs, and short crews make the next few years harder.
What should buyers do?
Get pre-approved now. Know your real payment at today's rate.
Shop builders, not just homes. Ask every builder about buydowns, price cuts, and closing cost help.
Watch the fall. Builders want to sell homes before winter. That can mean better deals.
Talk to someone who knows new construction. Builder contracts differ from buying a used home.
Sources
Freddie Mac, Primary Mortgage Market Survey, Sept. 24, 2026 — https://www.freddiemac.com/pmms
NPR, "Mortgage rates have just surpassed 7% for the first time in well over a year," Sept. 24, 2026 — https://www.npr.org/2026/09/24/nx-s1-5977796/mortgage-rates-freddie-mac-homebuying
WRE News, "Mortgage Rates Break 7% for First Time Since January 2025," Sept. 24, 2026 — https://wrenews.com/mortgage-rates-break-7-percent-september-2026/
U.S. Census Bureau, New Residential Sales, August 2026 — https://www.census.gov/construction/nrs/current/index.html
RISMedia, "New-Home Sales Slowly Rise; Midwest Grows Nearly 85%," Sept. 24, 2026 — https://www.rismedia.com/2026/09/24/new-home-sales-slowly-rise-midwest-grows-nearly-85/
HousingWire, "Builders cut prices as new home supply holds at 8.5 months," Sept. 24, 2026 — https://www.housingwire.com/articles/august-new-home-sales-incentives/
National Mortgage Professional, "More New Homes Are Underway, But Financing May Decide Who Wins," Sept. 2026 — https://nationalmortgageprofessional.com/news/more-new-homes-are-underway-financing-may-decide-who-wins
The Boston Globe, "Trump's immigration crackdown is leaving Mass. construction sites without workers," July 9, 2026 — https://www.bostonglobe.com/2026/07/09/business/immigration-crackdown-construction-industry/
Boston.com, "The construction labor shortage is a crisis," Sept. 11, 2025 — https://www.boston.com/real-estate/fall-house-hunt/2025/09/11/construction-labor-shortage-crisis/
Worcester Business Journal, "Real Estate Insider: Briefs for Sept. 21, 2026" — https://wbjournal.com/article/real-estate-insider-briefs-3/
Mass. Executive Office of Housing and Livable Communities, news releases — https://www.mass.gov/orgs/executive-office-of-housing-and-livable-communities/news
Homes.com, Massachusetts new construction listings — https://www.homes.com/new-homes/for-sale/massachusetts/
Have questions about a new home in Massachusetts? Reach out to Bob Wiltse, REALTOR®, eXp Realty. 978-793-1719 | bobwiltse.com
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