Builder survey indicates housing demand remains soft

According to the monthly HomeSphere/BTIG builder survey, demand trends are still soft and did not improve from a record weak survey in July. 

The latest survey shows that sales continued to plummet in August, with 61% of builders reporting year-over-year decreases in sales. 

Traffic also remained slow with just 17% of builders reporting year-over-year traffic increases, while 53% saw year-over-year declines. Last month, 58% reported year-over-year declines. 

The sales reading remains at a survey-record low, while traffic is the third worst reading of all time behind last month and the pandemic shutdown impacted April 2020, BTIG said.

Additionally, builders are moderating pricing activity more meaningfully than earlier in the year, and sales incentives are increasing.  

About 37% of builders lowered some base prices and 38% increased sales incentives on at least some homes, the survey shows.

In short, home demand continues to soften without much improvement, according to BTIG analyst Carl Reichardt. As we enter a typically slower seasonal time of year for home buying, builders are taking aggressive strides to prepare.

Here are some takeaways from the latest report:

• Sales and traffic relative to expectations continued to weaken. Builders reporting sales better than expected decreased slightly to 14% (vs. 15% last month), but builders reporting worse than expected sales have steadily increased since Feb. 2022 to 43%. Just 11% saw better than expected traffic (a survey low) vs. 14% last month. 
• 29% of builders raised some, most or all base prices in August, up slightly from 26% last month. 24% cut some, most or all base prices vs. 25% in July. 31% of builders increased "most/ all" or "some" incentives vs. 33% last month.
• A special question was asked this month about which building materials have become easier to obtain and/or less expensive than a year ago. Anecdotal responses varied quite a bit, but over half of respondents noted that lumber was less expensive and/or more available, while 21% answered "windows" and 21% responded that "nothing" had improved.

The monthly BTIG/HomeSphere Homebuilder Survey solicits the perspective of approximately 50-100 small and mid-sized tract homebuilders nationally about sales, customer traffic, and pricing trends.