Lower interest rates in August helped improve business conditions for home builders following a soft July, according to the latest BTIG/HomeSphere Home Builder Survey. While only 29% of surveyed builders experienced sales rates growth on a year-over-year basis—compared with 32% in July—just 23% of builders saw sales rates down on a year-over-year basis, a significant improvement from 36% of builders in July.
According to the survey, 37% of builders reported an increase in year-over-year traffic at communities in August, up six percentage points from a month ago.
Relative to expectations, 26% of respondents saw better sales in August and 25% of builders saw worse sales during the month. On traffic, 23% of builders experienced better-than-expected traffic in August and 24% of respondents experienced worse-than-expected traffic.
The number of builders raising some, most, or all base prices dropped to its lowest level of the year in August—15%. At the same time, in August the share of builders increasing some, most, or all sales incentives reached its second-highest level of the year at 27%.
The BTIG/HomeSphere survey also asked builders about the impact of mortgage rates in August. Forty-four percent of respondents indicated lower rates had a “modestly positive impact” on business and an additional 9% reported rate changes had a “strongly positive” impact. Forty percent of builders said the movement in rates had no impact on business. Seven percent of respondents reported mortgage rates had a negative impact on business because customers are likely expecting rates to drop further and are postponing purchasing decisions.
Despite the limited number of responses per state, responses suggest business conditions in Ohio and Oklahoma are largely positive. Georgia builders were more bearish on the market, according to BTIG.
The August BTIG/HomeSphere Home Builder survey generated responses from 115 small- and mid-sized tract and custom builders nationally. Respondents were asked about sales, customer traffic, and pricing trends.
