April Sales and Traffic Down While Input Costs Continue to Flatten
May 21, 2020
Pandemic concerns and shelter-in-place restrictions significantly impacted home builder sales and traffic in April, according to the latest monthly survey conducted by BTIG in partnership with HomeSphere. At the same time, however, input costs continued to flatten rapidly.
In fact, it was another survey low for lot costs with only 16 percent of builders reporting increases in April from March, down from 22 percent. Twenty-six percent of home builders reported rising material costs, yet another survey low, compared to 32 percent in March. Seven percent of builders also reported labor rate reductions, which is the highest in survey history.
Unsurprisingly, a large percentage of builders reported decreased year-over-year sales and significantly decreased traffic. Those numbers are expected to go up in future months as shelter-in-place restrictions continue to be lifted. The quality of traffic also appears to be improving, likely because buyers who are still shopping despite COVID-19 are likely to be more serious about buying a home.
Highlights from the latest Builder Intelligence Report
Sales and traffic. A record low 22 percent of respondents reported year-over-year increases in sales orders, down from 28 percent in March and 47 percent in April 2019. Fifty-two percent reported year-over-year decreases in sales, a record high, compared to 46 percent in March and 23 percent in 2019. For traffic, a record low of 16 percent reported increases in year-over-year traffic, while a record high of 74 percent saw declines. That compares to 20 percent and 54 percent, respectively, last month.
Expectations. Thirty-one percent of respondents reported sales as better than expected compared to 28 percent last month. Thirty-six percent reported sales as worse than expected, down from 46 percent in March. Some builders may be adjusting internal expectations to account for the pandemic.
Pricing and incentives. Builders are still reluctant to adjust pricing, either higher or lower, with a survey record of 70 percent of respondents keeping base prices flat (compared to 61 percent in March). Incentive use continued to increase modestly with 33 percent of respondents increasing some, most or all sales incentives compared to 23 percent in March. No builders reported lowering the use of incentives.
Input costs. In addition to input costs detailed earlier, 14 percent of builders reported rising month-over-month subcontractor costs. That compares to seven percent in March.
HomeSphere/BTIG Builder Intelligence 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.
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