Home Builders See Higher Cancellation Rates in Early April
April 8, 2020
HomeSphere is partnering with BTIG to keep our partners current on home building business trends as they relate to COVID-19's impact on the economy and our industry.
Our latest flash survey, compiled from April 3 to 6, indicates home builders are starting to see more cancellations — though it should be noted the majority still reported normal rates. Builders are also reporting slower than normal sales and very little foot traffic.
Business overall has been impacted by state and local government mandates created to contain the spread of the virus, affecting areas like supply availability and construction cycles, in addition to sales and foot traffic.
In the survey, 34 percent of respondents, up from 26 percent, reported that cancellation rates were higher than normal. However, 59 percent and seven percent described conditions as normal or lower than normal, respectively.
When it comes to sales, 27 percent reported normal seasonal levels, down slightly from 28 percent, and 70 percent reported below seasonal norms, up from 67 percent.
Traffic continues to worsen with 92 percent reporting below seasonal norms, up from 80 percent, as a result of slowing demand, stay-at-home orders, model home closures, remote work and builders’ own safety measures.
As far as continued plans for 2020, 49 percent of respondents reduced their starts expectations, up from 42 percent. Thirty-three percent remain on plan, down from 36 percent, and 18 percent have halted new starts, down from 22 percent. Sixty-nine percent reported that obtaining permits is taking longer than usual, while nine percent couldn’t obtain permits at all.
In all:
Continued operational disruption has led to longer construction cycle times, demand continues to slow down and more builders are reporting cancellations.
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