Discover more from CalculatedRisk Newsletter
Homebuilder Comments in August: Increased Incentives Helping Sales
"Construction cycle time has improved"
Here are some interesting homebuilder comments from around the country. In August, builders have cut prices and increased incentives. And cycle times are improving with less demand.
Homebuilder comments courtesy of Rick Palacios Jr., Director of Research at John Burns Real Estate Consulting (a must follow for housing on twitter!):
#Austin builder: “A lot of spec inventory to work through. August was a very poor month for sales across the board. Cancellations spiked from July and buyers showed no sense of urgency.”
#Baltimore builder: “Jumbo loan rates below 5% are helping buyers move forward in that segment.”
#Boise builder: “Construction cycle time has improved over the last 30 days.”
#Charlotte builder: “Sales were fairly strong in August. Increased incentives to help with closing costs and a buy down rate appear to be helping.”
#Cleveland builder: “Build cycle times have been improving over the last 4 or 5 months. Appointments have completely dropped off and traffic is very sparse at the models.”
#Dallas builder: “The slowing of starts is helping front end (foundation/framing) issues. Build cycle time is down and will go down further as material becomes more available.”
#Harrisburg builder: “When mortgage rates dropped in early August we saw a big uptick in buyer activity. This aligned with a large incentive and price reduction rolled out at same time. Took a big hit on margin to generate sales.”
#Houston builder: “We have slowed starts significantly, as have other builders, and we are confident this will enable us to bring our build cycle times down. Slowing starts are providing some relief to labor disruptions.”
#Jacksonville builder: “Frame material and labor have stabilized. Garage door delivery times also more predictable.”
#KansasCity builder: “Most of our build cycle challenges are starting to ease. Subcontractors on the front end of the building process are starting to call and ask for work.”
#Louisville builder: “Build times are getting better. One of our biggest delays is getting through the municipal permitting process.”
#Ogden builder: “With reduced sales and moderation of starts, build time on the front end has dropped significantly.”
#OklahomaCity builder: “Builders are now fighting for the same customers and systematically reducing prices.”
#Philadelphia builder: “A slowdown in sales helped to relieve the pressure on labor and supply issues.”
#Phoenix builder: “Incentives continue to grow, with some communities pushing 20% in total discount packages. The positive is there’s light at the end of the tunnel for improving build cycle times. The negative is there won’t be customers on the other side of said tunnel.”
#RaleighDurham builder: “Largest schedule constraint is not having electrical power from our local public utility. We’ve built everything with generators over the last 24 months! We have closings held up on finished homes due to not having power.”
#RiversideSanBernardino builder: “The amount of material shortages experienced 6 months ago have started to dissipate, however the current shortage of electrical switch gear has added weeks to our schedule on every project.”
#Sacramento builder: “No urgency in buyers. Large public [builders] with significant spec inventory are winning more of the sales with very large incentives (discounts and closing costs).”
#Tampa builder: “Big spec builders are slashing prices on their inventory homes that will close in 2022. If interest rates get to 6.5% the waters will get very choppy.”
#WashingtonDC builder: “Starts have declined drastically. The new environment is going to cause trades to drop their costs significantly and we expect that to make its way through all of supply chain.”
#WestPalmBeach: “So far, we still haven’t seen what most of America is experiencing [slowing]. Anything under $450K is still selling well." THE END