Are Structural Home Warranties One of the Keys to Pending Home Sales?

June 20, 2019

Are Structural Home Warranties One of the Keys to Pending Home Sales?

According to a December 2018 market snapshot from NAR (National Association of Realtors), pending home sales in the United States were down by 9.8 percent from the previous year. The rate of pending home sales is typically an indicator of the near future of the housing market because it offers a way to track when contracts are signed and when deals will close on existing homes. With a struggling housing market in an uncertain economy, this is daunting news for real estate professionals and new home builders. As a result, residential developers are looking for methods to increase their home sales by offering more security and confidence to buyers. So, are home builders’ warranties covering structural items one of the keys to increasing the rate of pending home sales?

Why the Number of Pending Home Sales Is Dropping

In order to determine whether home builders’ warranties might be part of the answer to increasing the number of pending home sales in the U.S., it’s important to first address the reason why the number of pending home sales is dropping. According to Lawrence Yun, a chief economist at NAR, the decline in pending sales can be attributed to multiple causes. First, home prices and mortgage rates are at a record high which creates an obvious affordability issue. Also, the stock market correction may be negatively impacting consumer confidence. CNBC’s Diana Olick adds that in addition to higher mortgage rates from the previous year, residential property values “surged dramatically in the last two years, as demand outpaced supply, especially on the lower end of the market.”

How Home Builder Warranties Can Help Increase Home Sales

Increase home sales with builder's warranties

Since it’s impossible to predict exactly how the housing market will look over the next few years, it’s vital that new home builders are prepared to put their best foot forward and compete in the industry. As it appears that the market might continue to favor buyers, residential developers will need to take a proactive approach to their offerings in the form of builder structural warranties and other incentives that give purchasers confidence when buying a home. Offering a home builder’s warranty from a trusted third-party provider is an excellent way for home builders to sweeten the deal in a competitive market and increase the number of pending sales. New construction home warranties offer comprehensive coverage on the structural elements of a home. This elevates buyer confidence and makes the purchase of new-home construction a safer, more enticing option. Home builder warranties also show that the developer was assessed and vetted by an independent provider, and they offer buyers an unbiased third-party resource with whom they can discuss structural issues and other concerns.

New Home Builder Warranties from PWSC

If the rate of pending home sales continues to drop, home builders will need to cater to buyers by creating homes based on the trends of the market and offering complete home warranty packages. Can home builder warranties help seal the deal in a buyer’s market? Builder structural warranties provide residential developers a leg up in the housing market by boosting their property sales offerings and adding a layer of protection in an uncertain economy. At PWSC, we assist home builders in showcasing their commitment to top-tier residential construction while offering best-in-class warranty protection and risk management resources. Home builder’s warranties from PWSC can help your construction business stay above water even if overall pending home sales are dropping. Contact our home builder warranty experts to find out how builder structural warranties can help you increase your sales in 2019 and for many years to come.