27% of homebuilders reduced prices and 54% offered buyer incentives in May
Here are key notes from National Association of Home Builders (NAHB) on homebuilder confidence, how builders are making deals with buyers right now, and how many homes are getting built.
NEWLY BUILT HOMES ARE 33% OF ALL HOMES FOR SALE
– In May, homebuilder confidence ticked up slightly (to a level of 50) for a fifth straight month.
– This NAHB/Wells Fargo builder confidence measure is on a scale of 0 to 100, where readings above 50 reflect a positive outlook.
– Even though builders are still having trouble getting materials at the right prices (e.g., lack of access to electrical transformer equipment), limited inventory of existing homes for sale helped builders remain cautiously optimistic.
– NAHB chief economist Robert Dietz notes 33% of homes listed for sale in March 2023 were homes in various stages of construction. This is materially above the 2000-2019 norm of 12.7%.
– Dietz predicts newly constructed homes will remain a key homebuyer priority in the coming quarters.
BUILDER INCENTIVES FOR BUYERS
Builders continue to offer sales incentives, which have supported new home sales since the start of 2023.
– 27% of builders reduced prices in May, compared to 30% in April and 31% March.
– Average price reduction in May was 6%, and has been 6% for 4 straight months.
– 54% of builders offered some kind of incentive to bolster sales in May, compared to 59% in April and 58% in March.
HOW MUCH ARE BUILDERS BUILDING?
– April starts on newly built homes were up slightly from March (2.2%) to 1.40 million annualized.
– 1.40 million is the number of housing units builders would begin if development kept this pace for the next 12 months.
– There are now 698,000 single family homes under construction, which is 16% lower than a year ago.
– There are now 977,000 apartments under construction, the most since 1973.
– In total, this is 1,675,000 single family and apartment units under construction, which is shown in the NAHB chart above.
– Newly built home prices $449,800 in March 2023. Can you afford this?
– Homebuilder confidence ticks up 5th straight month (NAHB)
– Single-Family Starts Improve in April (NAHB)