PodcastNational Housing Market Outlook

Putting Aloe on the Burns of a Hot Market

Dean Wehrli
Shelly Chen
Jody Kahn

Dean Wehrli

Shelly Chen

Jody Kahn

August 12, 2021

Today’s market trends move as fast as Allyson Felix in the Tokyo Olympics (well, maybe almost as fast). Thankfully, Jody Kahn, our Senior Vice President, surveys local home builders overseeing 15%–20% of national new home sales every month to keep a close eye on these fast-moving trends.

Here are some key takeaways from this week’s New Home Insights podcast with Dean Wehrli and Jody Kahn.

Featured guest

Jody Kahn, Senior Vice President, John Burns Research and Consulting

Hot Market Challenges and Consequences

  • Sold out! Builders have sold out of many communities and now have 17% fewer communities than one year ago.
 
  • 19% price hikes. One builder raised prices 65% last year. No, that is not a typo. New home price hikes averaged 19% across the country in the last year.
 
  • Struggling to finish the home. Labor and material shortages have led to longer build times and cost increases everywhere, including having to use substitute materials and products.
 
  • Not an affordability problem for everyone. Rising prices have worsened affordability, squeezing out some potential home buyers. However, many home buyers who are able to work remotely at least part time are relocating to more affordable areas and are easily able to afford the higher prices. This is the result of a term we coined in May 2020, The Great American Move.
 
  • Slower sales. Sales have slowed, but it is certainly not slow out there. Sales normally slow in the second half of the year; they did not slow in the back half of 2020.

Builder and Buyer Behavior

  • FOMO has slowed. Buyer demand remains hot but less frenzied. Fewer buyers are “panic buying.”
 
  • Spec building has grown. Builders are building more unsold homes, or “speculative” homes. They are offering more homes for sale long after construction has begun to get a better handle on construction costs and to benefit from the price appreciation during construction.
 
  • Early signs of price discounts. Cash incentives and selling agent bonuses on unsold and completed homes have returned at a few communities. Most builders did raise price in July though.

A Look into the Future

  • Expect more new homes for sale soon. Construction has increased, and more homes will be offered for sale as they near completion.
 
  • New home community supply won’t surge. With 67% of land brokers reporting that fewer lots are available for sale and brokers reporting fewer bidders on land, we don’t expect a massive increase in construction as some have feared.
 
  • Watch “sister city” migration patterns. Jody has a close eye on cities receiving large levels of in-migration and is looking to creative resources such as car-moving services, who are reporting that a migration from Florida to the Northeast is not occurring, even during the brutal summer months in Florida. The “sister cities” are the markets to watch most closely.

Want to Subscribe to the New Home Insights Podcast?

The New Home Insights Podcast is available on all major podcast platforms. Click any of the platforms below to subscribe.

Building Market Intelligence™

Every week, we deliver analysis to over 40,000 subscribers with our Building Market Intelligence™ newsletter. Subscribe to our weekly BMI newsletters to stay current on pressing topics in the housing industry.

About The Author

Dean Wehrli
Dean Wehrli
Principal
Dean helps housing sector clients figure out not just what might work and what might not, but why.
Shelly Chen
Shelly Chen
Research Analyst II, For-Sale
Shelly is responsible for working on various research projects as it relates to residential for-sale, including supporting our Burns Home Builder Analysis and Forecast report.
Jody Kahn
Jody Kahn
Senior Vice President of Research Surveys
Jody delivers timely and accurate insights on housing market trends at the metro, regional, and national levels. She combines statistics and commentary from JBREC’s independent surveys with data trends, forecasts, proprietary indices, feedback from consultants, and decades of housing experience to give clients insights that support business decisions.

Contact Us

If you have any questions about our services or if you would like to speak to one of our experts about we can help your business, please contact Client Relations at clientservices@jbrec.com.

Products and Services Mentioned

green check icon

New Home Insights Podcast

Issues, interviews, and insights into the U.S. housing market. Monthly takes on what’s happening in the housing market today, and what might be happening tomorrow.
green check icon

Research Membership

Our research services enable our clients to gauge housing market conditions and better align their business and strategic investments in the housing industry. We provide a thoughtful and unique holistic approach of both quantitative and qualitative analysis to help clients make informed housing investment decisions.
green check icon

Real Estate Consulting

Our experienced team of consultants helps clients make sound housing investment decisions. We thrive on their success and work with many clients over multiple years and numerous projects.

Latest Insights

Charting a 22-year roller coaster of investor activity
From Boomers to Zoomers: Housing Priorities by Generation
Dear Consultant: How do we address the shortage of skilled trades workers?