October Demand Beats Expectations Despite Pre-Election Rate Challenges
November 21, 2024
In the latest BTIG/HomeSphere State of the Industry report, builders reported slightly weaker business conditions compared to September.
In October, 32% of respondents reported year-over-year sales growth, unchanged from September. However, 33% experienced year-over-year sales declines, up from 28% last month. Compared to October 2023, this month shows improvement, as fewer builders saw sales down and more reported growth.
Base price increases continued for the second month, while incentives remained steady at 27%.
Regionally, Wisconsin builders were notably positive, while Georgia and Florida faced weaker conditions. Missouri and Utah were bearish, and Arizona and Texas showed mixed results. Builder feedback was lower than usual, likely due to election-related uncertainty. Despite challenges from the rate curve and softer year-over-year business strength, conditions exceeded expectations.
The latest NAHB/Wells Fargo Housing Market Index (released Nov. 18, 2024) came in at 46, up from 43 in October.
Highlights from the latest State of the Industry Report
Sales & traffic. October sales and traffic declined relative to September. 32% of respondents reported yr/yr increases in sales orders, stable sequentially, but 33% saw a yr/yr decrease in orders in October vs. 28% in September. 36% of builders reported an increase in yr/yr traffic at communities while 32% saw a decline vs. 35% and 28%, respectively, last month.
Sales & traffic relative to expectations. Business compared to expectations improved moderately in October compared to September. 27% of respondents saw sales as better than expected (19% in September), and 27% saw sales as worse than expected vs. 31% last month resulting in a material change in the better-minus worse spread to 0 from -12. 26% of builders saw traffic as better than expected, and 31% saw traffic as worse than expected (a better-minus-worse spread of -5). This compares to 22% better and 27% worse last month (also a spread of -5).
Base pricing & incentives. More builders decreased base prices in October compared to September; builders who increased incentives remained stable month-over-month. 17% of builders reported raising either "most/all" or "some" base prices, up from 16% last month; 20% reported lowering "most/all" or "some" base prices vs. 17% in September 2024. 6% reported decreasing "most/all" or "some" incentives vs. 4% 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 and FL builders reported weaker conditions. Builder response rates and commentary was less than usual this month, which we attribute mostly to uncertainty surrounding the election.
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.
How to get the monthly report
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