The beginning of 2024 has brought positive results for public builders, with many companies reporting record levels of sales and revenues as well as conditions supporting strong growth targets. The market for new-home builders is benefiting from resilient demand, partially aided by limited resale supply and financing incentives that can be offered by home builders.

For private builders, the year has brought similar results, with executives sharing largely positive sentiments about demand patterns through the beginning of the year.

“During the spring selling season, the demand and traffic have been in line with our expectations. While we’re no longer experiencing the exceptionally high numbers seen during the pandemic, we continue to see a steady flow of buyers in our markets,” says Marla Telfair, corporate director of sales at Drees Homes. “Given the current high interest rates and home prices, Drees Homes is actively working to make our price points more affordable for today’s buyers.”

While each market has exhibited different behaviors, Todd Chachere, CEO of Perry Homes says demand and traffic has remained strong and is up year-over-year for the builder. Fischer Homes CEO Tim McMahon says demand and traffic is up 24% over last year despite fluctuations due to interest rates and macroeconomic factors.

Ronda Conger, vice president of CBH Homes, says the spring market started off slow for the Idaho builder but is starting to pick up.

“Our self-guided tours are in line with spring traffic. Our strategy is a little bit different with targeted open house events that are up year-over-year,” says Conger. “We’ve been working hard to keep a good amount of finished inventory on the ground to ensure that our prospects know how to find us.”

CBH Homes and Drees Homes both noted shifts in company strategy to meet changing buyer preferences, providing more technology-forward solutions and transparency in the home shopping process. Conger says the company is working towards full transparency with product and pricing information on the CBH Homes website so as to not “gatekeep” information. Both Conger and Telfair of Drees Homes noted the importance of offering prospective buyers the ability to tour and access model homes on their own terms.

“Today’s home buyers are undoubtedly more tech-savvy than those from years past. As a result, buyers increasingly are relying on technology during their home search,” Telfair of Drees Homes says. “At Drees Homes, we recognize this trend and prioritize accuracy and having user-friendly information on our website.”

Financing Incentives

In the wake of elevated mortgage rates hovering around 7%, builders are benefiting from the ability to offer rate buydown financing incentives to help prospective buyers solve for affordability.

“We have seen success by offering flexible incentives to address each customer’s unique situation,” Chachere says. “Buyers that are sensitive to interest rates have taken advantage of our interest rate buydowns and forward commitments. We are not expecting incentive levels to change throughout the rest of the year.”

McMahon says while Fischer Homes offers “exclusive low rates and complimentary refinancing” with its affiliate mortgage partner, Victory Mortgage, customers in many of the builder’s operating markets prefer to tailor their own incentives. Such options include rate buydowns or design upgrades/

“The most effective incentives vary depending on factors such as the local housing market, potential buyers’ preferences, and current regional and national economic conditions,” McMahon says. “These conditions have changed rapidly in 2024. It’s essential for sellers, builders, and real estate professionals to understand their target audience, tailor incentives accordingly, and adapt quickly to these changing dynamics.”

Telfair says in the current rate environment, buydowns and rate promotions “can be the deciding factor between purchasing a home you truly love versus one that just fits within your budget.” She says Drees Homes will continue to offer buydowns as long as rates remain elevated around 7%.

In addition to rate buydowns, having quick move-in (QMI) inventory also continues to benefit home builders, particularly attractive buyers unable to find their home amidst constrained resale supply. Drees Homes says it has increased its QMI allotment across all divisions.

“Our analysis suggests that as long as interest rates hover around 7% and homeowners remain in existing mortgages with significantly lower rates, the supply of resale homes will continue to be limited,” Dan Jones, executive vice president of home building operations at Drees Homes, says. “Our strategy is twofold: we aim to attract resale buyers with our quick move-in inventory while also catering to those seeking more customized homes. Depending on market dynamics, we will adjust our inventory levels accordingly.”

McMahon says the majority of Fischer Homes’ business remains contract-to-build, as customers value the ability to personalize their home, though quick move-in homes remain a part of the builder’s portfolio.

“Some buyers may prefer move-in ready homes if they have an urgent time horizon or are relocating. Fischer Homes believes it’s important for builders and developers to offer a range of options to accommodate different preferences and to provide needed guidance along the way,” McMahon says.

Conger says CBH Homes has been a 100% spec builder since 2019.

“Buyers want to move in quickly and effortlessly. We are a buy-now society. CBH believes our spec inventory is the answer,” Conger says. “CBH Homes, just like other builders, works hard to balance our starts with demand, sales, and closings, our cycle times have improved year over year and we continue to keep making strides with reduced build times and costs.”

Land Strategy

According to the NAHB, land and lot availability ranked as top concerns for home builders entering 2024. Private builders are noting increased competition and pricing for land, but say they will remain strategic and measured with their approach to the land market.

“Our approach to land acquisition has been and will continue to be strategic and opportunistic in nature,” Chachere says. “We expect the land market to be extremely competitive, keeping upward pressure on land prices.”

Conger says CBH Homes is continuing to release communities and beginning new developments in new areas and cities around Idaho, while noting that the entrance of other builders into the state is driving up pricing in the land market. However, she says high interest rates “have some parties sitting” out of the land market.

“We’re always looking for amazing land opportunities to help continue our success and growth for future years,” Conger says. “If the location and price are right, then we’re in.”

McMahon says Fischer Homes is actively searching for smart, long-term strategic decisions by investing in locations that “will maintain their value in any economic environment.” However, the company is not overextending itself “on the financial terms of these deals and are using a variety of financing tools to accomplish this.”

Andy Seitz, vice president of corporate land for Drees Homes, says the strong demand in the housing market is giving the builder confidence to underwrite new deals in all ten of its operating markets. However, he says opportunities are limited “as land, especially land with utility access, is in short supply.”

“As a result, we continue to see elevated land prices and more difficult terms from developers,” Seitz says. “The company anticipates a high demand/short supply market for land in the near future. Of those two variables, we could foresee demand possibly changing in the short run.”

Technology, Chatbots, and Attainability

To respond to current market conditions and more knowledgeable buyers, Perry Homes is providing prospective customers with more tools, information, and engagement channels than it has in the past.

“The Perry Homes MyAccount lets our home buyers track the progression of their home while our internet home consultants and social media teams engage on more channels,” Chachere says.

Conger says CBH Homes has also unveiled a new technological offering to aid prospective buyers in their shopping experience: A chatbot on the CBH Homes website.

“We’ve added a new chatbot, Lucy, onto our website for 24 hour coverage. We still want human interaction and connection when our team is available, but know that buyers want 24/7 fast answers,” Conger says. “If they don’t get [fast answers], they’ll move on. So we’re working to be there for them whenever they need it.”

In addition to its new website rollout, Drees Homes has also debuted an affordable design collection, the Pure Style collection, and townhomes to help boost attainability.

“The Pure Style line emphasizes affordable, statement-making style with design packages assembled by our team of professionals,” Telfair says. “For Pure Style, the decision on the design package takes place at the model home instead of the design center. This savvy, streamlined process makes personalizing the home a breeze and helps buyers get into their new homes faster. Ultimately, Pure Style homes offer buyers a lot of little luxuries at a more affordable price.”

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