Fewer Builders Report Sales Declines in March

The monthly HomeSphere/BTIG survey for March revealed an improvement in business conditions for the third consecutive month. 

The survey found that 40% of builders reported year-over-year decreases in sales vs. 51% in February. 

Builders again reported a noticeable improvement in performance relative to expectations (38% of sales as better than expected vs. 27% last month and 18% of sales as worse than expected vs. 27% last month). 

Pricing activity is mixed; 21% of builders reported raising either some, most or all base prices in March (vs. 27% last month), while 22% of builders lowered most, all or some base prices (vs. 30% last month). 

Two special questions were asked regarding the compression of potential credit availability from regional banks. 

Nearly half of builders say "some" or "many" customers have directly expressed concerns about recent regional bank headline events. 33% of builders expect to experience or have already experienced AD&C loan tightening from regional banking partners and another 38% are concerned about the future.

BTIG analyst Carl Reichardt said, “New home demand momentum has continued to accelerate throughout the spring season, though pricing remains varied.” 

Here are a few highlights from the monthly report:

• Sales and traffic trends are still soft YOY but rising month-over-month: 27% of builders reported higher YOY sales vs. 23% in February and 46% in March 2022. 40% saw a YOY decrease in orders vs. 51% last month and 22% in March 2022. 29% reported an increase in YOY traffic vs. 19% last month. 29% saw a decline, compared to 45% last month.

• Sales and traffic relative to expectations see meaningful improvements: 38% of respondents saw sales as better than expected vs. 27% last month, while 18% saw sales as worse than expected, vs. 27% last month. Traffic was also up - 34% saw better-than-expected traffic, with 13% reporting worse-than-expected traffic (compared to 27% and 20%, respectively, last month). 
• Builders pricing activity is mixed, while incentive use picked up slightly: The number of builders raising prices increased. 
  • 21% of builders raised some, most, or all base prices in March, from 27% last month. 
  • 22% cut some, most or all base prices vs. 30% last month. 
  • Incentive use increased: 27% of builders reported increasing some, most or all incentives vs. 23% last month. 
• Homebuyers concerned about recent regional bank headline events: BTIG asked two questions about recent turmoil at regional U.S. banks. 47% of builders said “some” or “many” customers have directly expressed concern about recent regional bank events. 33% of builders expect to experience or have already experienced AD&C loan tightening from regional banking partners and another 38% are concerned they may in future.