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New Home Sales and Cancellations

Today, in the Calculated Risk Real Estate Newsletter: New Home Sales and Cancellations

Brief excerpt: Here is a table of selected public builders and the currently reported cancellation rate (I’m still gathering data). There is some seasonality to cancellation rates. The only builder that reported a sharp increase recently was KB Home comparing the three months ended May 31, 2022, with the three months ended May 31, 2021. “The cancellation rate as a percentage of gross orders was 17%, compared to 9%.”However, as KB Home noted on their conference call yesterday, a large portion of the increase in cancellations were on “unstarted homes”.

Currently cancellation rates are below normal for the home builders. As an example, Toll Brothers recently announced a cancellation rate of 3.8%, down from 4.3% the previous quarter, and well below their historical rate of 7%. During the housing bust, Toll Brothers cancellation rates peaked close to 40%.
There is much more in the newsletter.

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