Home builders are feeling jittery.
That’s according to a June survey of home builder sentiment by John Burns Real Estate Consulting. Demand for new homes is cooling as buyers cancel orders, and builders are slashing prices to offload homes, the survey found.
“Scary times,” a home builder in Nashville, Tenn. told the company. “Hoard cash and hang on for the ride!”
Sales of new homes fell 31% this June as compared to last year. Cancelation rates jumped in June to 14.5% nationally, up from 6.5% a year ago, as seen in the tweet below.
The monthly survey was based on 320 participants in 84 metro areas.
Texas saw the highest rate of cancelations (when buyers terminate a contract for a new home), followed by the broader Southwest, and Northern California.
A quarter of home builders are reducing their prices, according to the John Burns Real Estate Consulting survey.
There are couple of reasons that homebuyers are pulling back: Mortgage rates have risen considerably since last year, which has made borrowing expensive, on top of rising inventory levels.
Other surveys have suggested that home builder morale is sinking. Builder confidence fell for the sixth straight month in June, according to the NAHB/Wells Fargo U.S. Housing Market Index. This month’s numbers will be released on Monday.
Home builders surveyed by John Burns expressed frustration over the slowdown.
“Someone turned out the lights on our sales in June!” one builder in Atlanta, Ga. told the company.
“Sales have fallen off a cliff,” an Austin, Texas builder said. “We’re selling 1/3 of what we sold in March and April.”
A Boise, Idaho builder said that builders are slashing new home prices by 15% to 20%.
Write to MarketWatch housing reporter Aarthi Swaminathan at: [email protected]