Homebuilders are slowing down production and walking away from land deals as buyer demand cools.
The adjustment is easing pressure on two headaches that have plagued builders for years: high construction costs and supply-chain delays.
“We are starting to see some of that subside on the front end of things as [housing] starts have started to come down,” said Ryan Marshall, CEO of PulteGroup Inc. (NYSE: PHM), during a conference call with analysts on Oct. 25.
In the years following the Great Recession, builders underproduced, contributing to a housing shortage that came to a head after the pandemic’s arrival in early 2020. With offices across the country dormant, millions of Americans sought new homes that offered more space or lower cost of living. Record low mortgage rates, a result of the U.S. Federal Reserve’s action to prevent Covid-19 from becoming an economic disaster, added to the frenzy.
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