To maintain sales in this softer housing market environment, Lennar spent an average of 14% of the final sales price on incentives in Q1 2026—back to its 2010 levels.
Put another way, a $450,000 home sold with a 14% incentive rate translates to $63,000 spent on buyer incentives. That’s a lot of incentives.
Ever since the pandemic housing boom fizzled out, homebuilders like Lennar have compressed their gross margins—which hit all-time highs during that boom—in order to deploy bigger incentives to entice homebuyers. Indeed, at the height of the pandemic housing boom in Q2 2022, Lennar’s incentives rate was just 1.5%.
Giant homebuilders like Lennar have had to aggressively increase incentives across certain pockets of the Sunbelt, in particular—like Austin and Southwest Florida—to prevent an even bigger pullback in sales volumes.
The silver lining for Lennar—America’s second-largest homebuilder, which has a $22 billion market cap—is that while its incentive rate is at a decade-plus high, the upward jump has slowed, remaining at 14% for back-to-back quarters.
While Lennar’s gross margins and incentives are at 2010 levels, its aggregate net new orders are hovering around all-time highs.
