Home Builders Report Moderation in Home Pricing in Latest Report

Home builders are taking a more cautious approach to pricing according to our latest State of the Industry report, compiled with BTIG. In fact, only 38% raised “most/all” base prices in July compared to 78% in June. Still, 48% raised “some” base prices, compared to 16% in June.  

The report’s authors mark the moderation in price increase activity as a positive, decreasing the risk of a negative feedback loop in which builders are forced to reduce prices and potentially depress rather than increase demand.  

Sales and traffic trends softened modestly from June, with 38% of respondents seeing year-over-year sales increases compared to 44% in June. Meanwhile, 44% of builders saw year-over-year increases in traffic compared to 58% in June.  

Unsurprisingly, builder input costs remain elevated though 8% of builders reported declines. Nevertheless, the report indicates that the housing market is still operating within a generally healthy environment.  

Highlights from the latest State of the Industry Report

Sales. Sales and traffic indicators dropped in July for the third straight month. As reported above, 38% of respondents reported year-over-year sales increases which compares to 73% in July 2020, while 26% reported year-over-year decreases, compared to 31% in June and 8% in July 2020.  

Traffic. Though 44% reported an increase in year-over-year traffic, 16% reported a decrease (compared to 12% in June). Fewer builders also reported better quality of traffic with 46% reporting better quality year-over-year traffic compared to 52% in June and 67% last year.  

Expectations. Both sales relative to expectations and traffic relative to expectations remain healthy. 42% of respondents reported sales as better than expected compared to 42% in June, while only 12% saw sales as worse than expected compared to 17% in June. Meanwhile, 38% saw traffic as better than expected compared to 48% for June, while only 8% of builders saw traffic as worse than expected, which is unchanged from June. 

Pricing and incentives. The number of builders raising prices saw a drop-off in July, while the use of incentives continues to be moderate. In all, 86% of builders raised some, most or all base prices in July from June, which is down from 94% from May to June. For the eighth straight month, no builders reported lowering "most/all" or "some" base prices. 

Costs. Cost pressures remain elevated. In July, 75% of builders reported rising material costs compared to 80% for June and 85% in 2020. In labor and land costs, 69% and 58% of respondents reported month-over-month increases compared to 61% and 57% for June, respectively. In another positive, 27% of respondents reported increased availability of acceptably priced lots year-over-year compared to 18% for June and 11% last year. 

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: