September was worse than expected for the 150 small- and mid-sized tract and custom home builders surveyed by BTIG analyst Carl Reichardt in conjunction with HomeSphere, as lower interest rates failed to push buyers toward purchases.
“Relative to August, builders reported actual September business conditions as more mixed and worse relative to expectations,” he wrote in a report. “Bottom line: builders hoped lower interest rates might spur traffic and sales activity, and did in some cases, but improvement levels were somewhat below builder expectations.”
In August, 31% of builders saw sales as “worse than expected.” That compares to 25% in August. Traffic was slightly weaker; 35% of builders saw a year-over-year pick up in September traffic vs. 37%in August.
Other takeaways include:
* Sales & traffic. September sales showed mixed results relative to August. 32% of respondents reported year-over-year increases in sales orders vs. 29% in August, but 28% saw a year-over-year decrease in orders in September vs. 23% in August.
* Base pricing & incentives. Fewer builders decreased base prices in September compared to August; builders who increased incentives remained stable month-over-month (2nd highest level YTD).
* Regional color / interest-rate drop impact. While the small number of responses per state often “makes us reticent to reach conclusions about specific markets, we note that WI builders were almost uniformly positive on their market.”
