Mixed Builder Performance in September: Sales and Traffic Fall Short of Expectations
October 22, 2024
The latest BTIG/HomeSphere State of the Industry report revealed that compared to August, builders reported mixed business conditions in September, with results falling short of expectations.
While 32% saw year-over-year sales growth, up from 29% in August, 28% experienced declines, compared to 23% last month. Additionally, 31% of builders said sales were worse than expected, up from 25%. Traffic also weakened slightly, with 35% reporting an increase in September, down from 37% in August.
The percentage of builders raising base prices increased slightly from last month’s low, while the share offering sales incentives held steady at the second-highest level of the year (27%).
Regionally, Wisconsin, Illinois, and Texas showed strong performance, while Florida builders were more pessimistic. Georgia remained slow, and conditions were mixed in North and South Carolina. Overall, lower interest rates did lead to some improvement in traffic and sales, but the gains were below builder expectations.
The latest NAHB/Wells Fargo Housing Market Index (released Oct. 17, 2024) came in at 43, up from 41 in September.
Highlights from the latest State of the Industry Report
Sales & traffic. September sales showed mixed results relative to August. 32% of respondents reported year-over-year increases in sales orders vs. 29% in August, but 28% saw a year-over-year decrease in orders in September vs. 23% in August. Traffic weakened. 35% of builders reported an increase in year-over-year traffic at communities while 28% saw a decline vs. 37% and 23%, respectively, last month.
Sales & traffic relative to expectations. Business compared to expectations declined in September compared to August. 19% of respondents saw sales as better than expected (26% in August), and 31% saw sales as worse than expected vs. 25% last month resulting in a material change in the better-minus-worse spread to -12
from +1. 22% of builders saw traffic as better than expected, and 27% saw traffic as worse than expected (a better-minus-worse spread of -5). This compares to 23% better and 24% worse last month (spread of -1).
Base pricing & incentives. Fewer builders decreased base prices in September compared to August; builders who increased incentives remained stable monthover-month (2nd highest level YTD). 16% of builders reported raising either "most/all" or "some" base prices, up from 15% last month; 17% reported lowering "most/all" or "some" base prices vs. 18% in August 2024. 4% reported decreasing "most/all" or "some" incentives vs. 5% last month.
Regional color / interest-rate drop impact. While the small number of responses per state often makes us reticent to reach conclusions about specific markets, we note that WI builders were almost uniformly positive on their market. GA builders reported weak conditions. Anecdotal builder commentary was more substantial
than usual this month (see Exhibit 8) and underscores that while many builders did see sales/traffic improvement on the back of lower interest rates, the magnitude of that improvement was somewhat below (probably heightened) expectations.
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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