Home Builders Report Much Stronger Sales in May

In our latest State of the Industry Report, compiled by BTIG, home builders reported a bounce back in sales in May, suggesting April showers bring May flowers.  

Our monthly survey included 116 responses from small and midsized home builders, who indicated 47 percent saw positive year-over-year sales growth, up from April’s low of only 22 percent. Similarly, 27 percent of home builders saw year-over-year declines compared to more than 50 percent in April.  

Survey responses suggest sales are strongest in the south — a trend we’ve been seeing for awhile — and weakest in the west and northeast, where operations had to shut down completely in some states during the early stages of the pandemic.  

Based on their responses, BTIG predicted a strong rebound in builder sentiment, which we’re seeing with the latest National Association of Home Builders/Wells Fargo Housing Market Index. The index indicated that builder confidence jumped 21 points to 58 this month. 

Highlights from the latest State of the Industry Report

Sales and traffic. When it came to traffic, 39 percent of builders reported an increase in year-over-year traffic, while 40 percent saw a decline. This compares to a record low 16 percent who saw an increase in April, and a record high of 74 percent who saw a decrease in year-over-year traffic.   

Expectations. More than half of builders, at 54 percent, reported sales as better than expected compared to 31 percent in April. Eighteen percent reported sales as worse than expected versus 36 percent in April. Almost half of builders, at 49 percent reported traffic as better than expected compared to 21 percent in April. 

Pricing and incentives. We saw builders begin to raise prices in May after some mid-spring caution, with 28 percent raising some, most or all base prices. That’s compared to 14 percent in April. Only five percent lowered base prices. Builders also began lowering incentives with 20 percent increasing some, most or all sales incentives in May compared to 33 percent in April.  

Input costs. Overall, builders reported input cost increases. Forty percent of respondents reported rising month-over-month material costs compared to 26 percent in April. Nineteen percent saw an increase in lot costs and 20 percent saw subcontractor costs rise, compared to 16 percent and 14 percent, respectively, in April.  

HomeSphere/BTIG State of the Industry Report

HomeSphere partners with the research firm BTIG to create a monthly report to provide our builders and manufacturers with exclusive and timely insights about the market.

To compile the report, we survey HomeSphere’s 2,600+ regional and local home builders about sales, traffic, pricing, labor costs and other key industry metrics.

How to get the monthly report

If you are a builder and would like to participate and receive the monthly report for free, request an invitation below: