Here's a housing🧵to chew on over weekend. Mid-June update from 100+home builders across country. 1) rumblings of price ceiling. 2) slightly shrinking pool of qualified buyers. 3) some home releases not selling out immediately. 4) normal summer slowing as vacations take priority.
#Austin builder: “Some interest lists are shrinking & others are not. Seeing buyers who are no longer able or willing to afford the monthly payment. Definitely seeing attrition here. Frustration that prices continued going up without an opportunity to purchase.”
#Dallas builder: “Interest lists are definitely shrinking because of pricing. Some drop off is happening due to price. But the re-sale market is still so tight it hasn’t dropped substantially. Extremely concerned about pricing going forward.”
#Houston builder: “Interest lists are shrinking slightly. Likely just too much price pressure. It's out of hand. Some buyers are unable or unwilling to afford the monthly payments now, but only what we see from the slight decrease in contracts. Price shock is certainly a factor.”
#Orlando builder: “Traffic & interest high, but waned a bit past 60 days. Higher end slowing faster, buyers under $400K stayed steady. Intentionally slowing sales pace (missing budgets). Fingers crossed market still there when we release.”
#Tampa builder: “Traffic down b/c little to sell until sold backlog reduced. Monthly allocations are gone within 7-10 days. Traffic weakening mostly w/out of state buyer."
#WestPalmBeach builder: “Traffic slowed. Not sure yet if market slowing or fact that we don’t have anything to sell. Probably bit of both. Takes more than a day or two to sell a unit. It was selling same day as release before, now pricing high enough that some people saying no.”
#Chicago builder: “Traffic slowed, ~50% of where it was in Q1 and beginning of Q2. Feels like seasonality, not sure. Last raised prices 1st week of June after 3 increases in May. Plan is to try & maintain from here. Felt some pushback & hesitancy.”
#Cleveland builder: “Traffic has slowed. Many people now taking vacations for first time in a long time. People pushing back from massive price increases we’ve had.”
#Indianapolis builder: “Traffic down somewhat from May, which was already down from prior months. Quality still good. Seeing some resistance overall to higher prices. Sales in June lightest we’ve seen in almost a year. Part of that is having no spec inventory available.”
#Minneapolis builder: “New traffic down but be-backs are consistent. Quality is good. No differences by buyer segment. Continuing to increase prices every 2-3 weeks as needed due to material price increases.”
#EastBay builder: “Traffic still good but aren’t seeing as many 1st time buyers coming in. Temporarily sold out at all communities. Raise prices w/each sales release. Getting appliances & exterior stone seem to be worst delays. Labor also a problem w/every trade.”
#Reno builder: “Traffic down slightly vs. this time last month, but school’s out & people taking vacations now. Investors are not taking vacations apparently & still very active. Continuing to increase prices & amount of increases are down slightly.”
#Sacramento builder: “Slowed a little due to business reopening from COVID, also this time of year tends to be busy w/graduations & vacations. Increasing prices every release.”
#Baltimore builder: “Traffic continues to be strong. All price points still have strong interest & increasing prices every few sales. Just starting to see price resistance especially those in the “middle” price ranges that no longer qualify for a mortgage.”
#Boston builder: “No differences in traffic. Still selling off waiting lists & taking sales office visits on appointment only. Continue to push price w/each release – haven’t reached resistance yet.”
#Philadelphia builder: “Traffic definitely slowed. Reduced advertising & promotions because sold out into next year.”
#WashingtonDC builder: “Traffic down, mostly due to increased pricing & caps on sales. Starting to see some people drop out due to rising costs, many entry level buyers. Still increasing prices but not as frequently or as high.”
#Seattle builder: “Traffic remains strong however, slowdown over Memorial Day weekend. Continuing to get multiple offers on limited monthly releases but number of offers are noticeably decreasing. Continuing to increase pricing each month but not as aggressively.”
#RiversideSanBernardino builder: “First week of June was good, however, this past week it appears that all of the potential buyers were taking vacations. Increasing prices slowly.”
#Atlanta builder: “Traffic remains strong. Seeing move up buyer w/school age children wanting inventory to close before school. Don’t have a lot of standing inventory so seeing more sales lost to resales. Still have price escalators in place.”
#Birmingham builder: “Still restricting sales. Traffic is good, however, prices are starting to affect buyers. Just did a price increase a week ago and it knocked 2 of 3 buyers out of writing contracts in one community.”
#Charleston builder: “Definitely felt a decline in traffic. Combination of people getting out & about/traveling w/restrictions lifted. Mortgage pre-qualification becoming more of a challenge. Have homes that sold as far back as last year that costs have eroded profit margins.”
#Charlotte builder: “Still capping sales each month based on availability. Raised prices in some of stronger communities where interest list was longest & had lots coming. Sales agents told me they didn’t hear back from some prospects after calls/emails with price increases.”
#Nashville builder: “Sales are extremely slow, by design, as restricting new contracts to inventory homes that have reached completed drywall stage. Increasing prices ~2% per month. IF we had inventory to sell, traffic & sales would be great."
#RaleighDurham builder: “Traffic down in June. Don’t have anything to really market for sale right now which has an effect on the drop in traffic. Sales are intentionally down again due to the cap in releases. We are not pricing homes until lumber is on site and framing begins.”
#Tucson builder: “Sales are showing some signs of slowing likely due to price increases. Raising prices across the board.”
#SaltLakeCity builder: “Traffic & demand still strong. Sales way down due to intentional price increases & limited homes released for sale. Continuing to raise prices at crazy high rates, w/most communities that are selling up 30%+ in less than a year.”
#Denver builder: “Basically stopped sales so far this month so we are at zero. Traffic is okay, but still really strong online traffic & interest. Still pushing pricing as costs keep rising, but it is pushing buyers out of the market.”
#Phoenix builder: “Traffic down. Could be due to seasonality, locations opening up, & people getting early starts to summer. Sales paces could be higher if we let them & continuing to push prices. Last week we received price increases from 6 different trades.”
#LasVegas builder: “Traffic still busy, no real drop. Sales still super healthy, although it seems going deeper into priority lists to sell on the higher end (some people have either taken themselves out of the market or have purchased elsewhere). Prices still rising.” END OF🧵

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More from @RickPalaciosJr

14 Jun
Going through our monthly macro housing/econ deck again for June. Here are some charts catching my attention this month.

1/7: The share of Americans expecting home prices to increase over the next year is now higher than back in 2005.
2/7: Looks like tax advantages of owning a home aren't as big of a driver for housing as some thought.
3/7: Trend of shrinking home from 2015-2020 appears to be over. Hopefully not the return of McMansions.
Read 7 tweets
9 Jun
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.”
Read 28 tweets
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

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