Why Katy Builders Can Advertise Rates Resale Sellers Can't Match, and What the Fine Print Actually Says

Freddie Mac's weekly survey put the average 30-year fixed mortgage rate at 7.40% for the week of October 8, 2026, up from 7.03% two weeks earlier. The same week, a sales flyer for Perry Homes inventory homes in Houston communities including Jordan Ranch, Elyson and Lakes of Cane Island advertised 4.99%. That's a gap of almost two and a half points, and it's sitting on the same stretch of Katy where resale owners are trying to sell homes in the same price range.

The 4.99% isn't a 30-year fixed rate. According to Perry's terms, it's the starting rate on a conventional 30-year 7/6 adjustable-rate mortgage, fixed for the first 84 months and then able to adjust every six months. The 5.898% APR reflects the discount points Perry pays to buy the rate down. To get the offer, the buyer has to finance through Crestmark Mortgage or Parkstone Mortgage, which the terms identify as Perry affiliates, and the home has to close by December 31, 2026. Once you add those conditions, the comparison facing a Katy buyer is between two monthly payments with different expiration dates, more than between two prices.

Three builder offers, read past the headline number

Here are the terms published by three builders active in Katy this fall:

Look at the Lennar row. The note rate is 3.99%, but the APR is 7.204%, which is closer to the Freddie Mac fixed-rate average than to the number on the banner. Lennar's terms say discount points it pays bring the APR down, and they require financing through Lennar Mortgage for the rate and closing-cost offer. The window to sign a contract under that offer ends today, October 11, so read it as a snapshot of how builders are pricing this fall, not something to plan around. Lennar listed move-in-ready Sunterra homes on Reef Coast Drive at $289,990 and $292,990 under that promotion. Coventry's Sofi Lakes inventory in Katy showed price cuts too. One home on Arbor Village Lane dropped from $333,840 to $319,990, and another from $324,190 to $304,990.

The big incentive totals have limits as well. Perry's terms cap the combined flex cash and closing-cost contribution at 6% of the contract price and say that "lower sales prices may not receive the full $55,000." At 6%, a buyer only gets the full $55,000 on a purchase price of roughly $917,000 or more. On a $500,000 home, the cap works out to $30,000.

What the payment comparison actually looks like

Perry publishes its own example. A $500,000 home with 10% down gives a $450,000 loan, and at 4.99% the monthly principal and interest comes to $2,412.95 for the first 84 months, plus $63.75 in PMI. For comparison, we ran the same $450,000 loan at the 7.40% Freddie Mac average as a 30-year fixed. Principal and interest comes to about $3,115 a month, or roughly $700 more. That's our own illustration using a national average, not a quote. A buyer's actual rate depends on credit, down payment and lender.

That $700 a month is what a resale seller is up against. Most buyers won't put it that way, but they shop by payment, and the builder has bought the payment down.

The difference also has an end date. Perry's terms say that starting in year eight, the rate follows the 30-day SOFR index plus a 2.75 margin. The first adjustment can be as large as 5 points, later adjustments are capped at 1 point each, and the lifetime cap is 5 points over the starting rate. On a 4.99% start, the contract allows the rate to reach as high as 9.99%. It may never get there. The point is that the low payment is guaranteed for seven years, while a fixed-rate payment on a resale purchase is guaranteed for thirty.

Why the builder can do this and a homeowner selling nearby usually can't

You might expect builders to be playing by different rules. Mostly they aren't. Fannie Mae's Selling Guide puts the property seller and the builder in the same category, "interested parties," and caps their financing concessions the same way:

• Principal residence, LTV above 90%: 3% of the lower of sale price or appraised value
• LTV from 75.01% to 90%: 6%
• LTV of 75% or less: 9%
• Investment property: 2%

Freddie Mac's guide uses the same tiers, effective July 1, 2026. HUD's FHA guidance lets sellers, builders and developers contribute up to 6% of the sales price toward closing costs, prepaids, discount points and buydowns. That FAQ dates from 2019. The VA lets a seller or builder pay some or all of a buyer's closing costs with no cap on those credits, but separately limits seller concessions to 4% of the home's reasonable value.

Fannie Mae says the cost of any rate buydown funded by an interested party, or by a lender affiliated with one, counts toward those caps. So on a single loan, a builder and a resale homeowner face the same ceiling. The rules part ways at a step that comes earlier. A builder and lender can sign a standby, or forward, commitment that covers rates across many homes before any buyer signs a contract. Fannie Mae says these blanket agreements "are not subject to Fannie Mae's maximum financing concessions because they are not attributable to the specific loan transaction." Freddie Mac excludes qualifying pre-contract builder forward commitments as well. A homeowner selling one house has no pipeline of homes to arrange that kind of coverage for.

The published flyers don't say whether any particular Katy promotion uses a forward commitment. Perry's offer, for example, describes points paid on the individual loan and stays within a 6% combined cap. Still, the structure tells you something. Builders have an affiliated lender, a stock of inventory homes they want closed by year-end, and access to a financing tool built for volume. A resale seller has one house and one contract.

The resale seller's version of the same lever

On the resale side, the tool is Paragraph 12A(1)(b) of the Texas Real Estate Commission's One to Four Family Residential Contract (Resale), in the version effective July 1, 2026. It's a blank where the seller agrees to pay:

"an amount not to exceed $_____________ to be applied to Buyer's Expenses other than brokerage compensation or contributions under Paragraph 12B below."

The paragraph lists loan origination charges and prepaid items such as insurance and taxes among the buyer's expenses. It doesn't mention discount points by name, so whether a credit can go toward points depends on the buyer's loan terms and program rules. The federal caps still apply on top of that. Under Fannie Mae's guide, a credit can't exceed the buyer's actual closing costs, and anything above the allowed limit is treated as a sales concession and subtracted from the price when the lender calculates loan-to-value. So a resale seller can offer a buydown, but only on that one loan, sized to that buyer's down payment, and paid in cash at closing.

Where Katy's resale market is absorbing it

Katy's August numbers show the strain without pinning it on any one cause. Community Impact counted 563 sales across six Katy and Fulshear ZIP codes in August 2026, down from 738 in August 2025. ZIP code 77493 had the most sales, 224, but also the steepest drop, 34.12%. Of those 563 sales, 306 were between $200,000 and $399,999. That's the same range as the Sunterra and Sofi Lakes inventory prices above. Median prices fell year over year in four of the six ZIP codes, and average days on market rose in four. Days on market ranged from 44 in 77094 to 104 in 77423, and 77423 also had the largest median price decline, 6.73%.

Houston Association of Realtors snapshots for September 2026 show the pressure is uneven across Katy:

Katy–North has the most inventory and the biggest increase in listings, and its roughly $300,000 median is right where the builder inventory homes above are priced. The sources show those two things happening in the same place at the same time. No source we found measures how much builder incentives are causing resale price cuts or longer days on market. Still, a resale seller in the low $300s this fall is competing for a payment-shopping buyer against an inventory home with a bought-down rate, while a seller in a tighter area with a higher median sees less of that overlap.

Quick answers

Is the 4.99% Perry rate a fixed-rate mortgage? For the first 84 months it is. The loan is a 30-year 7/6 ARM, so after that the rate can adjust every six months within the caps in the offer terms.

Does a resale seller's credit count against the same caps as a builder's? On an individual loan, yes. Fannie Mae and Freddie Mac apply the same LTV-based limits to sellers and builders. The exception is a builder's blanket forward commitment signed before the buyer's contract.

Is there September data for Greater Houston as a whole? Not yet. As of today, the most recent metro-wide HAR release, dated September 9, covers August. It reported 5.3 months of supply and 54 average days on market across Greater Houston.

When a builder flyer and a resale listing land on the same Katy short list, the deciding numbers are the fixed period, the APR and how much credit the loan type allows. Nicole Freer Group compares builder incentive terms against resale concessions every week, for buyers working out the full cost and for sellers pricing against a bought-down payment. Bring us the flyer and the listing, and we'll walk you through the math side by side.

This article is general information, not legal, tax or financial advice. Consult a qualified professional about your situation.