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Don’t Forget! You Saw it in the
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August 2022 #14277 Page #76
How Are Dealers Feeling Today? Positively Nervous Craig Webb President, Webb Analytics
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ollect dozens of anecdotes from travels, panels, emails, and social media interactions, as I have recently, and three trends emerge to summarize the state of construction supply today:
1. Dealers say demand remains strong, with only marginal easing of supply chain pressures. 2. In contrast, gloom-and-doom statements abound among housing commentators, who equate recent speed bumps with going over a cliff. 3. Dealers hear those fears and all the general talk about a potential recession and thus have become cautious about conditions late this year and into 2023. Expect this confused state of feeling both positive and nervous to last well into the fall. When LinkedIn contacts wished me a happy birthday recently, I took the opportunity to ask them about conditions for their markets and products. Here are some of the things my well-wishers said: • • • • • •
No real slowdown, but lumber prices are a worry. No slowdown where I am, but I hear it’s down in metro areas. Volume off a little, margins down. Payments have slowed some. Fantastic business now, but we’ll see how things are in Q4. Not really seeing any slowdown yet.
These assessments are far from apocalyptic, and they make sense. Given the clogged supply pipeline, experts like Evercore ISI estimate builders have enough work just completing the homes they’ve started to keep overall construction activity growing to spring 2023. Now, contrast these comments with what John Burns Real Estate Consulting says it is hearing from new-home builders: • • • •
“Scary times. Hoard cash and hang on for the ride!” (Nashville, TN) “Someone turned out the lights on our sales in June!” (Atlanta) “Sales have fallen off a cliff. We’re selling 1/3 of what we sold in March and April.” (Austin) Builders are slashing new home prices by 15% to 20%. (Boise, ID)
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