Builders are witnessing a dramatic slowdown in the pace of sales as affordability issues and rising mortgage rates keep many buyers on the sidelines. significantly delayed the start of constructionleaving the builders with more land than they plan to build in the near future.
This has sharply halted new land acquisitions by D-FW and builders across the United States over the past few months. Many public builders tell investors during their earnings call that they are paying millions of dollars in fees away from land contracts. So.
Arlington-based DR Horton, America’s largest homebuilder, $34 million charge-off last quarter Relates to land and residential land contracts that have terminated or are scheduled to terminate. The company posted a 15% year-over-year decline in sales orders in the last quarter to 13,582 units. Cancellation rate Up from 24% last quarter to 32% last quarter.
Green Brick Partners, a Plano-based builder building in Atlanta with D-FW through brands such as Trophy Signature Homes, Southgate Homes and CB Jeni, has significantly delayed land acquisitions until the market has adjusted.
“We don’t need to buy land to grow our business, and we don’t plan to buy a lot of land until Q4 2022 or into 2023. is difficult, but the long-term view of the huge imbalance between housing supply and demand remains unchanged.
“A decade of low housing production has created a housing shortage of about 4 million units, and the adjustment will take years, if not decades. Recent and projected housing starts. Any future decline in housing costs could exaggerate the housing shortage.”
Green Brick also plans to postpone the next phase of land development in some communities due to market volatility and weak sales, chief operating officer Jed Dolson said. He said the company expects to cut land and lot development spending by about 45% next year compared to 2022.
Arizona-based Taylor Morrison owns or manages approximately 80,000 parcels nationwide and re-evaluates every transaction prior to closing. Spending on new land in the third quarter fell 70% year-over-year to $102 million, reaching the lowest level since 2016.
“We have a very good land bank, so it makes sense,” Taylor Morrison chairman and CEO Sheryl Palmer said in a conference call with investors on Oct. 26. I don’t feel the pressure to finally close a deal that doesn’t exist: “There will be an opportunity to invest when the time is right.”
Carter Kendall, first vice president of the CBRE Group’s land investment sales team in Dallas, said homebuilders and developers, large and small, are turning their backs on signing new contracts. said.
“The land market is definitely in a holding pattern of uncertainty when it comes to homes and homes,” said Kendall. “Demand for completed, undeveloped lots is the lowest I’ve seen in a long time.”
Kendall said some builders are still considering deals. They hope the market will improve by the time they actually start construction on the lots they’re buying, which could take several years.
“I’ve heard from two builders that if they were offered the right deal, perhaps some modification to the land or parcel price, they would definitely consider it,” he said. I was.