By: Susan Rogers
Mortgage rates have crossed another psychological threshold.
The Mortgage Bankers Association reported this week that the average contract rate for a conforming 30-year fixed mortgage rose to 7.12% for the week ending September 18, the highest level in more than two years. Mortgage applications declined again, while adjustable-rate mortgages accounted for a growing share of activity.
For an already challenged housing market, 7% matters. But Lori Lane, Founder and CEO of LLANE & Co., says the more important question for builders, brokers and real estate professionals is not when rates will come down.
It is: How do we sell homes successfully if they don’t?
“For several years, the industry has been waiting for rates to normalize, affordability to improve and urgency to return,” Lori Lane said. “At some point, waiting becomes a strategy, and not a particularly good one. Builders should plan their 2026 and 2027 strategies around the market they have, not around an assumption that 5% mortgage rates are just around the corner.”
Atlanta is showing what happens when affordability pressure collides with a lack of buyer urgency.
The latest Georgia MLS numbers illustrate the challenge. Across the 29-county Atlanta metropolitan area, 4,655 residential properties went under contract in August, down 26.6% from the same month last year. Closed sales declined 3.2%, while active listings increased 3.6%.
Within the 12-county Atlanta Core market, pending sales fell 28.9% year over year.
“There are homes available, sellers who want to sell, builders who want to build and consumers who still want to move,” Lane said. “What is missing is enough conviction to make many buyers act. That makes this more than an inventory or affordability problem.”
Not every hesitant buyer has the same problem.
Lane says the industry needs to distinguish among three very different consumers.
“Some buyers simply cannot afford today’s payment,” Lane said. “Higher rates have reduced their purchasing power, and better sales technique cannot change the math.”
Others can afford to purchase but dislike the financial proposition. They may have substantial income or equity, yet borrowing at 7% feels unattractive compared with the mortgage they already have.
Then there are buyers who can afford the home and may even want it, but are afraid of making the wrong decision.
“What if rates fall after I buy? What if prices decline? What if I cannot sell my current home? What if waiting produces a better deal?” Lane said. “Those are not qualification problems. They are confidence problems, and they require a different sales and marketing response.”
Financing has become part of the product.
New-home builders have tools that individual resale sellers often do not. According to recent Realtor.com research, 18.8% of new-construction listings offered a buyer incentive in August, with reduced mortgage rates appearing on 13.8% of listings and an average of close to 4%.
On a $450,000 home with 20% down, Realtor.com calculated that the difference could reduce principal and interest by more than $600 per month.
“That changes the new-construction-versus-resale conversation,” Lane said. “Buyers should evaluate more than the purchase price. The comparison should include monthly payment, cash required at closing, incentives, maintenance, warranties, energy efficiency and the cost of updating an older home.”
She added, “Builders increasingly are not just selling the house. They are selling the financial structure that makes the house attainable.”
Incentives alone are not a strategy.
“The same incentive will not solve every buyer’s objection,” Lane said. “A younger buyer with limited cash may respond to a rate buydown or closing-cost assistance. A move-up buyer may need help selling an existing home. An active-adult buyer may have substantial equity but hesitate to exchange a 3% mortgage for a 7% mortgage. A luxury buyer may care less about the rate than whether the home, location, service and lifestyle justify making a move.”
For Lane, the question should not simply be, “What incentive are we offering?”
It should be, “What is preventing this buyer from saying yes?”
“Answering that requires better qualification, stronger discovery and a more sophisticated sales conversation,” Lane said.
The sales presentation has to change with the market.
“In a fast-moving market, inventory and rising prices create urgency,” Lane said. “Today’s buyers often have more time, information and choices. Builders and sales teams have to create clarity where the market no longer creates urgency.”
Instead of moving immediately from product presentation to incentives, Lane says sales teams should be asking different questions.
What monthly payment feels comfortable?
What needs to happen with the existing home?
Is the concern financial, or is it uncertainty?
What would make moving now more valuable than waiting?
“The answers should determine the strategy,” Lane said. “For some buyers, that may be a rate buydown. For others, it may be help navigating the sale of an existing home. For still others, the solution may be demonstrating the lifestyle, convenience, location or long-term value well enough to make the move feel worthwhile.”
New construction has an opportunity.
“A difficult housing market does not eliminate opportunity. It changes where opportunity lies,” Lane said. “Builders can structure financing, adjust inventory, package incentives, offer warranties and deliver move-in-ready homes. They can also create lifestyle and amenity experiences that individual resale sellers cannot replicate.”
But those advantages matter only if consumers understand them.
“Marketing has to translate incentives into real-life value,” Lane said. “Sales teams have to distinguish affordability objections from confidence objections, and builders have to become more precise about where they spend incentive dollars.”
“The winners may not be the builders offering the largest discounts,” Lane added. “They may be the ones that understand why their buyers are hesitating and solve that specific problem better than anyone else.”
Mortgage rates will eventually change, but Lane says builders cannot base today’s strategy on waiting for tomorrow’s market.
“At 7%, the question is no longer when the market will rescue us,” Lori Lane said. “It is what we are willing to change while we wait.”
