Despite conditions contributing to less demand in the fourth quarter of 2022, Dream Finders Homes reported significant increases in home building revenue for both the quarter and for the full year.
Home building revenues increased 29% year over year in the fourth quarter to $1.1 billion and increased 74% for the full year to $3.3 billion. The company said the growth in home building revenue reflected both home price appreciation as well as an increase in home closings compared with the fourth quarter of 2021.
The home builder delivered a record-level of home closings in the fourth quarter, 2,316, with an average sales price of $479,554, a 9% increase from $440,939 in the fourth quarter of 2021. Home closings for the full fiscal year increased 41% to 6,878.
“While I am very proud of our team’s efforts that led to this record year for the company, I am conscious of the economic conditions that negatively affected demand, resulting in 1,107 net new orders during the fourth quarter,” says Dream Finders Homes chairman and CEO Patrick Zalupski. “We have seen an increase in the net new order rate in the first quarter to date, but there are numerous factors, chiefly higher mortgage rates, which could continue to impact sales throughout 2023.”
Fourth quarter net new orders represented a 43.9% decrease compared with the fourth quarter of 2021. For the full year, net new orders decreased from 6,808 in 2021 to 6,045 in 2022. Dream Finders Homes reported a quarterly cancellation rate of 32.1% compared with 13.1% during the fourth quarter of 2021. The home builder’s cancellation rate for the full year was 21.5% in 2022 compared with 12.2% in 2021. The company said despite the high cancellation rates, it has “been successful in finding new buyers for these homes.”
At the end of the 2022 calendar year, Dream Finders Homes had a backlog of 5,548 homes, valued at $2.5 billion, representing decreases of 13% and 14%, respectively, compared with the end of the 2021 calendar year.
“While the entire home building industry was impacted by supply chain challenges and rising mortgage rates, our company quickly adapted to changing market conditions during the year,” Zalupski says. “Our disciplined land-light strategy and diligent underwriting allowed us to strengthen our balance sheet as we accumulated record cash of $365 million and had total available liquidity of $487 million at year-end 2022.”
