Not Ones To Capitulate Without A Fight, Builders Go Full Day-To-Day

For some of us, lyrics and life run constantly in concurrent streams. Instants where a lyric floats to mind and etches its way into real life almost as though it had to have been composed specifically for you, then, and there, fuse with everyday living’s magic.

Some of them – both the lyric and the in-real-life moment – cross over more often than others. This one, for instance, as it applies to the housing cycle and its nested ecosystem of homebuilders and their partners:

You don’t need a weatherman to know which way the wind blows.” –

Homebuilders are reporting that demand is slowing, yet a large number of housing units will be delivered later this year (with all these units under construction).

Our own Dream Team thought and practice leader, Scott Cox puts this calculus into real-world terms as a brightline moment-of-truth playing out over the next 20 weeks.

We’re in the beginning of a downward adjustment in for sale housing. Time will tell if it’s a modest correction, or more severe. Much will depend on the next few months and whether we can sell out the specs in the python (to mix a metaphor) without very large discounts.

That depends on whether demand reduction is gradual, or we hit a buyer air pocket. Also, it ties to whether we greatly reduce spec starts, so that buyers who are in the market need to buy our already under-construction specs.

One way or another, the truth – modest or severe – will be showing up in the all the lagging indicators within the next 100 to 140 days.

In the 75 or fewer markets that serve as proxies to the national new home marketplace in the U.S., homebuilders’ themselves live and work as the leading indicators – each day and night in trench rules-of-engagement-style daily forays, round-the-clock reconnaissance, flash war-room intelligence, tactical response, and ever-evolving strategy aimed at mitigating risk, maximizing profit, and securing a navigable pathway forward.

All this is to say that homebuilders’ ears to the ground and their appreciation for what what going on with customers’ pursestrings and mindsets, as well as with the puts and takes process of regaining control of their build-cycle schedules and costs, put them well out in front of these lagging indicators.

As long as they’re talking to and listening to people sitting at their kitchen tables, the degree to which there’s a menacing rumbling on the horizon, or, rather, signs of sunnier days ahead, they’ll know long before housing starts, permits, and new home sales data come to light, the answer to the question, “modest or severe?”

Ask just after Thanksgiving.

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