New Home Sales and Traffic Trends Stabilized in August

Home builders reported stabilizing or somewhat improved new home sales and traffic trends in August, according to the latest State of the Industry Report, compiled with BTIG. In fact, nearly half of respondents reported a year-over-year sales increase compared to 38% in the last report.  

At the same time, for the second straight month, builders reported taking a more cautious approach to price increases, though most are still pushing some prices. See how that breaks down below.  

While business isn’t as robust as the first half of the year, the overall demand environment remains healthy. It’s likely the NAHB/Wells Fargo Housing Market Index that gauges builder sentiment will come in near or slightly ahead of last month’s reading of 75. Ninety-six builders took part in this month’s survey.  

Highlights from the latest State of the Industry Report

Sales. For August, 49% of respondents reported year-over-year sales increases compared to 38% for July (and 69% in August 2020). Only 19% saw a decrease in orders compared to 26% for July.  

Traffic. Traffic indicators stabilized instead of dropping for the first time in three months, with 44% of respondents reporting an increase in year-over-year traffic — the same as the previous month. Meanwhile, 18% reported a decline, up from 16%.  

Expectations. Both sales relative to expectations and traffic relative to expectations dropped. In sales, 33% of respondents saw sales as better than expected compared to 42% for July, and 13% saw sales as worse than expected versus 12% for July. In traffic, 36% saw traffic as better than expected compared to 38% for July, while 14% of builders saw traffic as worse than expected versus 8% in the last report. It’s likely builder expectations for sales are moderating partly due to lack of available product to sell.  

Pricing and incentives. The number of builders raising prices saw a drop-off for the second straight month, while the use of sales incentives continues to be sporadic. For base prices, 69% of builders raised some, most or all base prices in August from July compared to 86% bumping at least some bases sequentially in the last report. For the first time in nine months, one builder reported lowering some base prices. Incentive use was up slightly with 9% of builders increasing most, all or some incentives compared to 8% for July.  

HomeSphere/BTIG State of the Industry 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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