Stable Business Conditions in June Amid Increased Incentive Activity
July 18, 2024
In the most recent HomeSphere/BTIG State of the Industry Report, business conditions remained stable compared to May. However, there has been a noticeable weakening in pricing power, coupled with an increase in incentive activities.
In June, sales and traffic indicators were generally consistent with those in May, though with slight variations. Thirty-two percent of respondents reported year-over-year increases in sales orders per community, compared to 33% in May and 27% in June 2023. Thirty percent experienced a year-over-year decrease in orders in June, up from 26% in May, but down from 39% in June 2023.
There was a slight improvement in traffic. Thirty-seven percent of builders reported an increase in year-over-year traffic at communities, up from 35% in May and 30% in June 2023. Twenty-six percent saw a decline in traffic, consistent with May but an improvement from 34% in June 2023.
These figures indicate a stable market with slight improvements in traffic, though sales orders are experiencing more variability
The latest NAHB/Wells Fargo Housing Market Index (released June 16, 2024) came in at 42.
Highlights from the latest State of the Industry Report
Sales and traffic. June sales and traffic indicators were generally consistent with May, albeit slightly weaker or sales and stronger on traffic. 32% of respondents reported yr/yr increases in sales orders per community vs. 33% last month and 27% in June 2023. 30% saw a yr/yr decrease in orders in June vs. 26% in May and 39% for June 2023. 37% of builders reported an increase in yr/yr traffic at communities and 26% saw a decline vs. 35% and 26%, respectively, last month and 30% and 34%, respectively, in June 2023.
Sales and traffic relative to expectations. Business compared to expectations remains balanced, but improved slightly in June from May, especially traffic. 27%of respondents saw sales as better than expected (consistent with May); 23% saw sales as worse than expected -- a better minus worse spread of +4. Last month, this spread was +1. 30% of builders saw traffic as better than expected, and 22% saw traffic as worse than expected (a better minus worse spread of 8). This compares to 27% and 27%, respectively, last month (spread of 0).
Base pricing and incentives. Fewer builders increased base prices in June compared to May; incentives remained generally consistent. 23% of builders reported raising either "most/all" or "some" base prices, down from 32% last month; 16% reported lowering "most/all" or "some" base prices vs. 19% in May 2024. 26% reported increasing "most/all" or "some" incentives vs. 24% last month; 5% reported decreasing "most/all" or "some" incentives vs. 9% last month.
Regional color. While the small number of responses per state make us reticent to reach conclusions about specific markets, we note that SC builders were almost uniformly positive on their market. We also saw relative strength in AZ, MI and NC. MN and VA builders were largely negative; we saw relative weakness in FL as well. TX – a key market for many builders – saw mixed responses.
HomeSphere/BTIG State of the Industry Report
HomeSphere partners with the global investment bank 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.
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