Builder Sales and Traffic Remain Strong as Cost Concerns Grow

In our latest State of the Industry report, compiled with BTIG, residential new construction builders indicated that sales and traffic trends remained strong in March — and that’s particularly true compared to March 2020, when operational shutdowns were in full swing. Most builders, at 75 percent of respondents, also said they still aren’t seeing a negative or positive impact to sales and traffic because of higher mortgage rates.  

Meanwhile, the number of builders raising prices continues to rise, while the use of incentives continues to drop. Ninety-five percent of builders raised some, most or all base prices in March from February. That compares to 89 percent of builders who bumped bases sequentially from January to February and only 23 percent in March 2020.  

All respondents reported month-over-month increases in materials costs, while a growing number reported that finding acceptably priced lots is difficult. Still, the results match with a higher NAHB Housing Market Index reading, which came out at 83 in April. Sixty home builders from across the country contributed to the latest State of the Industry report.  

Highlights from the latest State of the Industry Report

Sales. In March, 70 percent of respondents reported that they saw year-over-year increases in sales compared to 65 percent for February and 28 percent year-over-year. Only eight percent reported a decrease. 

Traffic. Sixty-seven percent reported an increase in year-over-year traffic at communities, while 12 percent reported a decline. That compares to 75 percent and eight percent, respectively, in our last report. Builders reporting a better quality of year-over-year traffic decreased slightly from results reported for February. 

Expectations. Builders reported that both sales relative to expectations and traffic relative to expectations increased, with 60 percent of builders reporting better-than-expected sales (compared to 43 percent for February) and 62 percent reporting traffic as better than expected. That compares to 58 percent reported in the prior month. 

Pricing and incentives. As mentioned, pricing continues to rise, while for the sixth straight month, no builders reported increasing most or all incentives, though 39 percent reported lowering some, most or all incentives. That compares to 27 percent who reported doing so for February. 

Costs. Costs remain elevated and keep rising as evidenced by all respondents reporting rising costs in March compared to only 32 percent in March 2020. Seventy-nine percent and 66 percent of respondents reported month-over-month increases in labor and land compared to 60 percent and 58 percent for February. 

Interest rates. Builders were once again asked if interest rates were having an impact on their businesses and 75 percent reported no impact, compared to 64 percent in our last report. Fourteen percent reported a negative impact (down from 19 percent), while 11 percent reported a positive impact, compared to 17 percent for February.  

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 2,700+ 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: