What would it take to get home buyers off the fence?

Builders are stuck with bulging inventories of homes -- most of them priced lower than six months or a year ago -- that are still not selling. Strategies to bring buyers back into the market dominated the recent weeklong annual convention of the National Association. It was also the key subject of a consumer opinion survey conducted by the association's research subsidiary.

The study, conducted in early January, polled more than 700 self-described "on-the-fence" buyers. Asked why they hadn't yet committed to a purchase, 44% said they were holding out for lower mortgage rates, 41% said they weren't sure they could qualify for financing and 38% said they expected to see lower house prices.

The mortgage rate that consumers said would be most effective in persuading them to buy now. A 30-year, fixed-rate loan at 3% was ranked twice as effective an enticement as a 3% loan fixed for five years, with an adjustment to 5.25%, fixed for the remainder of the loan term.

Price concessions also are compelling to would-be buyers. Most effective of all: a 10% discount below true market value -- in other words, instant equity for the purchaser upfront.

Their traditional approach of offering "incentive packages" of free upgrades and amenities may not be all that effective. The same may be true for "green" features -- energy efficiency certifications and environmentally sensitive designs. If a new house comes with a green certification but costs $2,000 more than a standard model, this doesn't motivate shoppers to buy, researchers found. Even if the house costs the same as a standard house, that won't do the trick.

Bottom line: Builders who offer combination packages of special financing, price concessions, lower down payments and perhaps application guarantees would encourage buyers off the fence.