Builder Sales Improve, While Investors Could Play Growing Role in Demand

The latest State of the Industry report, compiled with BTIG, indicates sales are improving, even as traffic declines. Unsurprisingly, builders are continuing to take a more cautious approach to increasing prices.  

We also asked a special question related to investor activity and, interestingly, investors may be playing a growing role in contributing to demand and price acceleration.  

Overall, the report indicates that demand is not as robust as earlier in 2021, but the environment remains healthy and builders are generally more optimistic than pessimistic. 

In regards to investor activity, respondents were asked what percentage of homes were being sold as investment properties. While 68% of respondents reported that 10% or less of their sales were going to investors, 10% of respondents said that more than 41% of sales were to investors. It should be noted that builders could also be unknowingly selling to investors. Of our respondents, 11% said they were unsure how many of their properties were going to investors, while 10% said 11 to 40% of homes were being sold as investment properties.  

The results of this survey should match the November NAHB/Wells Fargo Housing Market Index, coming in again at 80, or higher.  

Highlights from the latest State of the Industry Report

Sales. Sales indicators improved with 42% of respondents reporting that orders increased year-over-year compared to 34% for September and 76% in October 2020. 

Traffic. Meanwhile, traffic indicators declined in October with 37% of respondents reporting an increase in year-over-year traffic compared to 39% in the previous month.  

Expectations. Both sales and traffic relative to expectations increased after dropping for two months. Among respondents, 41% reported sales as better than expected compared to 24% last month, while 38% reported traffic as better than expected compared to 29% last month.   

Pricing and incentives. The number of builders raising prices increased slightly, while the use of sales incentives continues to be sporadic. In this report, 77% of builders raised some, most, or all base prices in October compared to 67% in September.  

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: