Private Builders Report Little Help From Rate Decreases

January 2, 2024

12-2023 BTIG Survey Blog Hero Image

In the latest HomeSphere/BTIG State of the Industry Report, private builders reported feeling discouraged with no help from rates in November, while price increase activity was at an all-time survey low.

While sales and traffic trends have been stable over the past two months, they continue to be weak. Private builders are still challenged by higher interest rates and availability and cost of capital, while public builders have the flexibility to buy down mortgages and better access to capital.

In the latest report, sales increased 16% compared to 15% in October. Forty-eight percent of builders reported a decrease, compared to 45% the previous month. At the same time, private builders are seeing a decline in traffic, with 47% reporting a decrease and only 13% seeing an increase. In addition, private builders see both sales and traffic as worse than expected rather than better, and for sales, at a more pessimistic rate than in October.

Source: HomeSphere, BTIG Research
Source: HomeSphere, BTIG Research

Nine percent of respondents — the lowest level in more than six years of the survey — reported raising all, most or some base prices. Meanwhile, incentive use remains largely unchanged from previous months. New home demand trends continue to remain sluggish for private builders, however these are expected seasonal trends.

Source: HomeSphere, BTIG Research
Source: HomeSphere, BTIG Research

The latest NAHB/Wells Fargo Housing Market Index (released Dec. 18, 2023) came in at 37.

Highlights from the latest State of the Industry Report

November sales and traffic trends steady with October (and still better than last year). 16% of respondents reported yr/yr increases in sales orders per community vs. 15% last month and 8% in November 2022. 48% saw a yr/yr decrease in orders vs. 45% last month and 71% for the same month last year. 13% of builders reported an increase in yr/yr traffic at communities; 47% saw a decline vs. 16% and 48%, respectively, last month and 8% and 69%, respectively, in November last year.

Sales performance relative to internal expectations lapsed in November and traffic was disappointing for many builders as well. 19% of respondents saw sales as better than expected; 31% saw sales as worse than expected (negative spread of -12). Last month, 27% of respondents saw sales better than expectations and 28% saw worse, for a negative spread of just -1. 16% of builders saw traffic as better than expected, while 31% of builders saw traffic as worse than expected (negative spread of -15). This compares to 19% and 36%, respectively, last month (negative spread of -17).

Base price increase activity was the lowest in survey history; incentive use remains mixed. Just 9% of builders reported raising either "most/all" or "some" base prices vs. 23% last month. 25% lowered "most/all" or "some" base prices, a bit better than the 29% reported in October. 27% reported increasing "most/all" or "some" incentives vs. 31% last month, while 8% reported decreasing "most/all" or "some" incentives vs. 6% last month.

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

If you are a builder and would like to participate and receive the monthly report for free, request an invitation below:


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