Mid-Market Builders Report Decline in Business Conditions, Led by Weakness in Florida
August 16, 2024
The BTIG/HomeSphere State of the Industry report for July shows that small and mid-sized home builders are experiencing modestly weaker market conditions compared to June. The survey indicates that while some builders are seeing renewed activity due to lower interest rates, the overall sentiment remains cautious, particularly in Florida.
While 32% of builders reported an increase in sales rates year-over-year, the percentage of those reporting a decrease rose from 30% in June to 36% in July. Notably, 38% of builders found sales to be worse than expected, marking the weakest sentiment since January 2023.
Pricing trends also reflect the market's softness, with only 20% of respondents raising base prices — the lowest level this year. Meanwhile, 28% of builders increased sales incentives, the highest percentage so far in 2024.
State-specific results show that South Carolina and Indiana are performing well, while Florida, despite representing just 7% of respondents, heavily influenced the overall negative sentiment. Texas presented mixed results, and Arizona's market remained solid.
The latest NAHB/Wells Fargo Housing Market Index (released August 15, 2024) came in at 39, down from 41 in July.
Highlights from the latest State of the Industry Report
Sales & traffic. July sales and traffic indicators weakened compared to June. 32% of respondents reported yr/yr increases in sales orders per community, flat sequentially, vs. 24% in July 2023. 36% saw a year over year decrease in orders in July vs. 30% in June and 42% for July 2023. 31% of builders reported an increase in year over year traffic at communities and 34% saw a decline vs. 37% and 26%, respectively, last month and 30% and 31%, respectively, in July 2023.
Sales & traffic relative to expectations. Business compared to expectations declined in July compared to June, especially in sales. 26% of respondents saw sales as better than expected (27% in June); but 38% saw sales as worse than expected vs. 23% last month resulting in a material change in the better-minus-worse spread to -12 vs. +4 in June. 26% of builders saw traffic as better than expected, and 34% saw traffic as worse than expected (a better-minus-worse spread of -8). This compares to 30% better and 22% worse last month (spread of +8).
Base pricing & incentives. Fewer builders increased base prices in July compared to June; builders who increased incentives reached the highest level YTD. 20% of builders reported raising either "most/all" or "some" base prices, down from 23% last month; 17% reported lowering "most/all" or "some" base prices vs. 16% in June 2024. 28% reported increasing "most/all" or "some" incentives vs. 26% last month; 2% reported decreasing "most/all" or "some" incentives vs. 5% last month.
Regional color. While the small number of responses per state often makes us reticent to reach conclusions about specific markets, we note that SC builders were almost uniformly positive on their market. FL builders reported especially weak conditions; without them, our overall results skewed mixed to slightly positive this
month. We also saw relative strength in IN and WI while IL and VA builders were largely negative.
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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