Just published September home builder survey results (sales, prices, costs, communities, etc.). Big themes: 1) Supply chain, supply chain, supply chain. 2) Monthly price hikes no longer the norm. 3) Some of the hottest markets sounding toppy. Market commentary to follow…
#Austin builder: “No end in sight for labor & material issues. Told by logistics guy last week that his company believes it will take at least a year to get the supply chain back to working.”
#Austin builder: “Availability of windows has limited closings this year & availability of appliances has caused closings to slide to a later month. Availability of paint is stressing Q4 closings & causing even more bunching toward late in the year.”
#Dallas builder: “Supply chain has gotten much worse in last 60 days. Costs are out of control. Lack of labor is driving most of the cost issues. Need demand to drop before things will change. Labor costs continue climbing each month while quality continues decreasing.”
#Phoenix builder: “As a market, we definitely pushed prices to the point where demand is starting to thin.”
#Denver builder: “Not just cost, it's availability. No reliable schedule on cabinets right now. Other products are hit & miss. Every aspect of the supply chain is a mess right now. 70% of lumber cost decrease in Q3 was offset by cost increases from other trade categories.”
#LasVegas builder: “There is something different about the market. Sales are still there, but sales agents are having to work a little harder for sellers than they did the first half of the year.”
#SaltLakeCity builder: “We stopped sales for 4 months. Now opening up some but limited & finding much more buyer resistance at higher prices.”
#Greenville builder: “Windows have a 16-week lead time. I-joists & trusses have a 12-week lead time. Some appliances are back ordered 3 months. Paint materials are back ordered 4 weeks.”
#LosAngeles builder: “It sucks. While I'm sure certain costs have increased due to COVID-related matters, certain suppliers & subcontractors seem to be gouging.”
#RiversideSanBernardino builder: “Our costs along with delays have taken a huge chunk of our profits. But the hardest part is the lack of predictability.”
#SanDiego builder: “Cost & schedule mayhem. No other words for it.”
#Allentown builder: “Supply chain is broken. Our best answer is to provide orders to trade partners 3-4 months in advance so that we receive materials on time.”
#Jacksonville builder: “Not expecting construction cost pressures to get any better in 2022!”
#Tampa builder: “As a luxury builder, we’re receiving larger % price increases than national builders, who have greater control over pricing through contracts & advance commitments. This has always been evident, but the magnitude seems to have increased over the last year.”
#WestPalmBeach builder: “Land is more expensive, so even though home prices are much higher, we’re not making much more from a margin percentage standpoint once you factor in land & vertical costs. Land sellers don't understand just how much costs have risen.”
#Minneapolis builder: “Costs have stabilized but we're still having to substitute materials due to backorders, shortages, etc.”
#OklahomaCity builder: “No multiple offers. Buyers aren’t coming out as much as they did in spring. Inventory starting to build up.”
#Sacramento builder: “Hit the price ceiling in most of our communities. Rolling out greater incentives to get buyers back in the door.”
#Reno builder: “Unfortunately, we see lumber increasing again currently.”
#WashingtonDC builder: “Lot availability, delayed community approvals, material availability, & labor issues are artificially slowing sales. Most communities with few constraints continue selling at very high volumes.”
#Boston builder: “Costs are rising from mostly manufacturers, every 3 - 4 months.”
#Baltimore builder: “Lumber costs dropped, everything else went up.”
#Philadelphia builder: “Even though lumber has come down from being up by 400%, every other item in the house has increased.”
#Honolulu builder: “Supply issues are increasing. Lead times are increasing for various products. Shortages & lack of supply create a need for substitutions.”
#Boise builder: “Several manufacturers are imposing immediate price increases, some requiring retroactive increases on product contracted but not delivered/paid for yet. Delivery dates of materials are not dependable (months behind in several cases).”
#Boise builder: “HVAC equipment & garage doors are hard to get. Lead times for windows are now 4 months. Sales slowed sharply in September. Up until recently houses sold within a week after we listed for sale. Now listed houses are sitting with very little sales traffic.”
#Seattle builder: “Biggest issue is getting the right sheen & product lines for Sherwin Williams paint. Shower glass doors/safety glass. Windows were 2-3 weeks normally, now taking 11 weeks. Don’t anticipate subcontractors holding the line on not passing on labor cost increases.”
#Bakersfield builder: “Garage doors are most problematic, with always long lead times & back orders.”
#Louisville builder: “Supply chain disruptions are a daily challenge even when issuing purchase orders months in advance. Don't see anything improving on these fronts.”
#Charlotte builder: “Continues to be unstable with supply & manpower.”
#Wilmington builder: “Lumber costs stabilized, but we’re all waiting on trusses. Once trusses arrive, we may see an uptick in lumber & panel prices.”
#Nashville builder: “Supply chain on hardware & glass shower door supply is erratic.”
#FortWorth builder: “Seemingly every week we face a new allocation, shortage, or delayed delivery.”
#SanAntonio builder: “Availability of labor & windows are more of a challenge than rising costs at this point.”
#Houston builder: “Price plateau only sustained by ultra-low rates. If rates move up 50 bps, builders should get ready for very slow sales without significant help from commodity suppliers, manufacturers & labor. Unable to forecast or manage labor costs.” THE END

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More from @RickPalaciosJr

8 Sep
Companies tied to housing revising guidance due to supply chain. Commentary from our builder survey this month indicates things getting worse before they get better. Homes sitting, waiting for materials (dead days). Big delays in windows. Delta outbreaks. In sum, a crapshoot. 🧵
#Nashville builder: “It's a crap shoot. Some municipalities will issue permits in 1 week, & others are 6-9 months behind. Supply chain is a mess. Windows are now 7 months out, cabinets are 6 months out, etc.”
#Chicago builder: “Build cycle increased due to backordered materials including bathtubs, appliances, & ceramic tile. Trades are much more limited in availability & now have some ‘dead days’ with no activity.”
Read 25 tweets
2 Sep
Just surveyed ~400 pro remodelers. Top 4 themes: 1) Big remodels all the rage; 2) Many remodelers are booked until 2022+; 3) Product lead times & labor shortages still bad (see chart); 4) Homeowners fixing & staying put, not selling. Commentary from across country to follow…
#Texas remodeler: “I can’t grow with 20 week lead times on basic products. I started asking my suppliers what products are easiest to install. I don’t have enough labor to spend more time installing a touchless faucet than absolutely necessary.”
#Texas design-build firm: “My clients are essentially flipping their homes, but they aren’t selling. They want something fresh & new.”
Read 10 tweets
20 Aug
Just surveyed 6,000+ real estate agents across country. Top themes from our 1st ever RESALE agent survey: 1) Buyer fatigue, w/rumblings of remorse. 2) Bidding wars a bit less bonkers. 3) Cash is King & ton of investors. 4) Inventory gridlock. Commentary across country to follow…
#LosAngeles agent: “20-minute allotted home viewing time slots with offers due next day by noon, & buyers are asked to give up every contingency under the sun.”
#NYC agent: “Luxury home buyers feel the market is overpriced & have backed off.”
Read 24 tweets
19 Aug
Doing monthly review of our macro housing/econ 350+slide deck. Five charts grabbing my attention for August:

1/5: Home price appreciation finally leveling off. Blue line is our national index, which appears to have peaked at +20% YOY last two months.
2/5: Similar story on new home prices according to builders we survey across the country. Rate of YOY price increases tapering off a bit in July at +19% YOY.
3/5: Our Google apartment search proxy keeps hitting new highs. No real seasonal blip so far in 2021, which is showing up in crazy rent growth figures currently.
Read 5 tweets
6 Aug
Analyzing July new home trends from our just published monthly builder survey. Top 3 themes: 1) Frenzy phase for housing is over, but still solid demand. 2) Fewer builders restricting sales. 3) Hitting price ceilings in more markets. Commentary from across the country to follow.
#Austin builder: “Builders are starting to offer incentives again to drive traffic and sales.”
#Dallas builder: “We have hit price ceilings in the majority of our submarkets.”
Read 21 tweets
26 Jul
Land is the most important yet least transparent part of homebuilding. To help, here’s commentary from land brokers across the country per our July survey. Top themes: 1) Builders going further out for deals. 2) Bigger land deals are back. 3) Development delays & lot shortages.
#SaltLakeCity land broker: “You can't get all the lots you need even when you overpay.”
#SanAntonio land broker: “Getting a vaccine approved took less time than getting land entitled.”
Read 17 tweets

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