Homebuilder survey shows weaker sales and demand in March

U.S. homebuilders reported that sales softened in March compared to February amid economic volatility and a spike in mortgage rates, according to the BTIG/HomeSphere monthly homebuilder survey.

Demand cooled after early-year gains, the survey of small and midsized homebuilders found. In March, 35% of builders reported year-over-year sales declines, up from 23% in February. At the same time, 34% saw higher sales, only slightly better than 32% in February.

Consumer traffic softened more clearly too as 33% of builders reported higher year-over-year traffic, down from 43% in February, while 35% reported lower traffic versus 18% the prior month.

At the same time, sales versus internal expectations weakened. In March, 26% of builders said sales were better than expected (down from 33% in February), and 26% said sales were worse (up from 22% in February), bringing the “better-minus-worse” spread to 0 from +11.

For traffic, 24% of builders viewed results as better than expected (down from 40% in February), while 21% saw traffic as worse (up from 11%), taking the corresponding spread down to +3 compared to +29 in February.

Fewer builders raised their base prices in March. According to the report, 17% of builders increased some, most or all base prices, down from 19% in February. More reported cutting prices, with 23% lowering some, most or all base prices versus 21% in February.

The use of incentives also moved higher. In March, 24% of respondents increased some, most or all incentives, up from 18% in February. About 6% decreased incentives, and 59% kept them unchanged, similar to last month.

Commentary from participants also turned more cautious. Builders in multiple regions cited the conflict in Iran, rising gas prices and reaccelerating mortgage rates as near-term headwinds on buyer urgency and confidence. These macroeconomic pressures appear to be amplifying ongoing affordability and inventory challenges just as the industry enters the peak spring selling window.

For homebuilders, the March reading suggests the early-year improvement in demand is fragile. Higher borrowing and energy costs are pushing some buyers to the sidelines, forcing many builders to lean harder on incentives and selective price adjustments to protect absorption and backlog quality heading into the heart of the selling season.

Tyler Williams reported and wrote this article with drafting assistance from HousingWire Automation, an editorial tool that helps transform announcements and industry data into HousingWire-style news coverage.