Despite the economic effects and pressures of an election year, third quarter results revealed resilience in the homebuilding industry. Overall performance remained steady, underscoring the sector's strength in the face of broader market challenges. These results highlight an industry that continues to adapt and grow, even amid a challenging environment.
Net Sales, Revenue, and Average Sales Price
Net sales climbed across the board for the top eight builders, with most seeing gains in revenuetoo. Amid ongoing discussions about affordability, the top eight builders posted average home sales prices ranging from $377,600 to $968,000. Compared to last year, average sales prices were mostly flat or slightly down, with minor decreases of one to five percent.
Cancellation Rates
Encouragingly, cancellation rates dropped, suggesting that today's buyers are more committed tofollowing through on contracts compared to a year ago.
Gross Margins and Incentives
Gross margins dipped one to three points across the board, primarily due to increased incentives offered to move lingering inventory. While these numbers are notable, builders have consistently weathered the storms of 2024 maintaining market momentum.
SG&A, Net Income, and Community Count
In the latest quarter, SG&A expenses and net income varied among the top eight builders, reflecting growth-driven operational costs. As builders pioneered into new markets, their community counts rose by 2-4%, signaling ongoing expansion, although many anticipate slower growth in 2025.
Land
A key theme in builder earnings calls over the past year has been a commitment to shifting toward a "land-light" strategy. By opting to source developed lots from third-party developers, they can reduce land assets on their balance sheets and concentrate on building, selling, and closing new homes.
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