Homebuilders have been hit hard in recent months and they’re building on those losses today.
Reuters The Wall Street Journal reports that homebuilders have had to resort to all kinds of incentives to boost sales. It reports:
Home builders have boosted cash incentives and upgrades to lure buyers, as sales flag in some markets due to rising prices and higher mortgage rates.
The incentives, which can run into the tens of thousands of dollars, are intended to soften the sticker shock that has put the cost of buying a newly built home out of reach for some families.
Upgrades can include free appliances, blinds, premium flooring or garage-door openers. Also growing in popularity are financial carrots such as paying buyers’ closing costs, covering some of their down payment or paying to reduce their mortgage’s interest rate for a year or two.
“I think there is a weakness in the market right now,” said Mark Ward, managing partner of ForeverHome LLC, a closely held home builder in Raleigh, N.C., set to construct roughly 400 homes this year. “Everybody’s giving more incentives today than they were in the summer.”
KBW, however, notes that October is typically a tough month for homebuilding stocks. “Historically, builders tend to underperform in Oct. followed by outperformance in Nov.-Jan. (in anticipation of Spring orders),” write Jade Rahmani and team. They expect that to happen this year.
DR Horton (DHI) has fallen 2.5% to $18.19, while PulteGroup (PHM) has dropped 2% to $15.80, Lennar (LEN) has declined 2.1% to $34.10, KB Home (KBH) is off 2.3% at $16.59 and Toll Brothers (TOLL) is down 1.9% at $30.89.
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