Lawler: Selected Operating Results, Large Home Builders

Cancellation Rates Increasing Sharply

From housing economist Tom Lawler:

Below are some selected operating results from some large home builders for last quarter. Note that the sales cancellations number are derived from reported sales cancellations rates and may be off by a bit due to rounding.

One of the more striking statistics on orders and cancellations was from MDC Holdings, where gross orders totaled 1,569 while sales cancellations totaled 1,270!!!!  And in its “Mountain” division (Colorado, Idaho, and Utah), net orders were NEGATIVE 3 homes!

(Note:  most builders report sales cancellation rates as cancellations as a % of gross orders; MDC reports sales cancellation rates as cancellations as a % of the previous quarter’s sales backlog).

CR Note: Rising cancellation rates means the Census Bureau is overstating new home sales and underestimating inventory. See: New Home Sales and Cancellations: Net vs Gross Sales