New home sales fell in May, Y/Y & M/M. Theme of the month was sales decline by builder design. Few comments on demand slowing or skittish buyers, even w/new home prices +18% Y/Y nationally (survey record). Builder commentary from across the country per our survey to follow...
#Nashville builder: “Gapped out. Sales resume in June as new communities & phases start to open. By moving ability to contract on inventory homes later to finished drywall stage (window installation stage previously), expect sales to show continued decline. Decline by design.”
#Charlotte builder: “Paused sales from mid-May to mid-June in all communities & will selectively release homes for sale in the last 2 weeks of June & coming months. Sales look lower vs. last month but was capped due to limited lot availability & no inventory.”
#Atlanta builder: “Recalibrating sales strategy with delayed starts (until full cost transparency). Implemented escalation clauses, pre-sale fees, reduced co-op commissions, bid selections, & weekly price increases, with no reduction in demand currently.”
#Knoxville builder: “Sales per community appear to have gone down, but it's due to lack of inventory to sell. We could sell more, but we need more finished lots right now.”
#Birmingham builder: “Only have 1 community able to write contracts at this moment. All others have been put on hold due to excessive backlog & extended build times.”
#Orlando builder: “May sales were capped in 100% of communities. There will be a complete pause in 100% communities for June.”
#Jacksonville builder: “Our community in this market was capped on sales for May. June will be a temporary pause with no sales.”
#Tampa builder: “We have drastically restricted sales for the next 3 months while we reset.”
#Naples builder: “Just sold out & need to replenish communities.”
#Sarasota builder: “Sold out & need to replenish.”
#Phoenix builder: “Pausing in some communities to have more control over costs, manage backlog, & not gap out but still capitalize on margins.”
#ColoradoSprings builder: “Buyer waitlists are so long, we can confidently delay sales in order to deliver a better buyer experience over a shorter time, while doing our best to understand the market pricing deeper into construction process of home.”
#Denver builder: “Stopped selling or slowed releases in every community to take advantage of sales price appreciation & more appropriately price to costs. Fear cost increases will soon outpace sales price appreciation. Raising prices 2% per month & continue selling out monthly.“
#SaltLakeCity builder: “Shut sales down 2.5 months ago. Sold out of 2 communities & shut off sales in other 2. In 1 community we’ll sell last handful of lots with escalation clauses after significant price increases. In the other we’ll only sell homes at Sheetrock stage.”
#Austin builder: “1.5 month sales pause in all communities to get backlog under control & pace pricing with cost increases.”
#Dallas builder: “High prices impacting sales, but not to extent concerned w/future sales. Restricted sales in several communities. Went back to May/June starts w/contract counters of $30k-$60k & retained ~80%. Hard to know what real demand is since stopping/limiting sales.”
#Houston builder: “Deliberately slowed sales to maximize value of each sale & bridge gap until new sections come online. I have land through 2025 secured. Sell out is simply a gap out that we knew was coming due to development delays.”
#Chicago builder: “Sold all of the spec homes we had & are waiting to start anything new due to construction cost & land cost issues.”
#WashingtonDC builder: “Needed to slow sales because backlog is 11-12 months & we’re worried about further escalating costs during that time period.”
#VirginiaBeach builder: “Stopped sales until lumber stabilizes/declines 2 months in a row. Not going to chew up lots on low margin deals. Two communities sold out in current phase & have reservations on all lots in next phase in each community. Not releasing sales prices.”
#Boise builder: “We’re only building spec homes & are listing them at completion.”
#Bend builder: “Not listing homes until they’re in drywall, & they still sell before completion. Can't build fast enough due to subcontractor base issues & material availability.”
#Tacoma builder: “Temporarily paused all lumber package purchases until we can further evaluate the cost of building homes.”
#Reno builder: “Only thing that would prevent us from making our sales goal would be the inability to release more homes for sale. We’re slowing down our sales releases to let construction catch up & this will slow down our sales rate.”
#OrangeCounty builder: “Raising prices to an unprecedented percentage increase & our costs are outpacing us.”
#RiversideSanBernardino builder: “Sense we are nearing the capacities of our buyers with these price increases.”
#SanDiego builder: “Uncharted territory. Raising prices & we keep selling homes. Every time I'm glad we covered our costs with pricing, the costs go up more. Can't keep this up forever.” END OF🧵

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More from @RickPalaciosJr

3 Jun
Some fresh home builder commentary for top #Texas markets. In general, buyer interest lists aren’t shrinking much, and if a few drop-off, builders are easily backfilling. Drumbeat a bit louder on prices getting too high. Demand still pretty nuts.🧵to follow...
#Houston builder: “Buyer interest lists are shrinking slightly. Likely too much price pressure, it’s out of hand.”
#Houston builder: “We’ll be metering sales again in June.”
Read 11 tweets
19 May
Here's May mid-month home builder channel check I hinted at earlier. Builders are pushing prices w/little pushback, though some starting. Some builders are using price escalators & highest/best offer. Many limiting pre-sales, shifting to spec, & pricing home later in build cycle.
#Dallas builder: “Not selling build jobs in May, starting specs only, and not selling until drywall. Costs are too out of control for us to take the inflation risk on build jobs. So sales are way down.”
#SanAntonio builder: “Only selling specs at Sheetrock stage. Last month, it was frame stage.”
Read 28 tweets
14 May
Going through our monthly macro housing/econ deck (it's almost 400 slides)! 10 charts that caught my attention.

1/10: Apparently people buy homes even if mortgage rates aren't 3% or below.
2/10: Looks like mortgage lending is back to pre-COVID norms. Lenders saying 'easy' fell off a cliff in 2Q20 but now back to norm.
3/10: Builders jacked prices 16% YOY in April, about 4x the rate of appreciation pre-COVID.
Read 10 tweets
10 May
I did an April home builder commentary 🧵last week, switching to building material dealers this week (companies making/selling products to home builders). We asked, “What worries you the most, regarding your business & the remainder of 2021?” Here’s what followed…
“Material cost volatility degrading margins for the duration of the year; labor availability is a close second.”
“Continued supply chain disruptions and product availability.”
Read 10 tweets
6 May
Here’s on the ground local home builder commentary from across the country per our April survey. A lot of builders are pressing the pause button &/or slowing things down until construction costs moderate & they can catch up with sales. Worries about buyer price ceilings too...
#Chicago home builder commentary: “We sold all of the homes we had in early 2021 & haven’t started anything new, & may not due to the cost of construction. Can’t hold pricing for clients longer than 45 days with rising material pricing.”
#Nashville home builder commentary: “Pray for lower lumber prices.”
Read 13 tweets
21 Apr
Some interesting housing color from mid-April around the country home builder channel check. Bunch of market commentary to follow...will try to hit most top markets.
#SaltLakeCity home builder mid-April color: “Still have 10x buyers to available homes to buy. Went to 'highest/ best' offer system March 1st & offers over asking price are shocking. Most offers are 10+% over ask, that's after raised base prices $10K to $20K+ with each release.”
#Austin home builder mid-April color: “Super high demand. Volume controlled with release process, otherwise would be unbearable. Some price increases are $100K between releases.”
Read 28 tweets

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