Metrostudy Metro DC and Baltimore Consulting Team Presents Latest Sentiment Survey Results

Metrostudy’s latest Sentiment Survey asked new home industry executives to reflect on sales performance in the third quarter of 2018 and share their expectations for the fourth quarter. We also asked respondents to identify the most-concerning work issue today. A considerable majority of survey respondents (68%) work in the metro Washington, DC area, but other contributors hail from Richmond, Baltimore, and other regions.

Downward Sales Trends continue

Q1. Considering 3Q18 results, please rate your average sales per community.

NoVa Oct. SS Graph 1

The Sentiment Survey’s perennial first question takes a look in the rear mirror. In our last survey (conducted in early July), 20% of survey respondents reported 2Q18’s average sales volume failed to meet quarterly sales goals (up from 8% the previous quarter). However, even more respondents told us in early October that sales did not meet expectations from July to September (36%). The share of respondents who exceeded or met 3Q18 sales goals fell to 64% from 81% in 2Q.

Predicting a Strong Year-End

Q2. How optimistic are you that average sales per community in 4Q18 will outperform sales in 4Q17?

NoVa Oct. SS Graph 2

The second question Metrostudy asks every quarter relates to optimism going forward. The consensus: 4Q18 sales will meet or exceed 4Q17’s actual sales (75% expect equal or better sales) – reflecting a generally optimistic outlook although 3Q18 sales failed to meet expectations for an increasing share of respondents. The share of doubtful responses settled in the 25% range (up from 16% in 3Q) and the share of truly optimistic respondents declined slightly to 23% in 4Q from 28% in 3Q.

 

The reasons some of our respondents were unsure or doubtful that 4Q would meet expectations included:

“We are seeing a slowdown in our traffic and qualifying is becoming more difficult.”
“[We see] increasing interest rates and a lack of lot supply due to weather delays.”
“The higher end market is very soft while inventory of used homes is very high.”
“We are focusing more heavily on attached product, which has been selling at double the pace of detached.”
“Last year, 4Q17 was lousy and I expect 4Q18 will also be lousy.”

 

Mortgage Rates Causing Sleepless Nights

Q3. What single issue keeps you up at night? NoVa Oct. SS Graph 3

The table above summarizes Sentiment Survey responses since 1Q18 for our last question. The red font indicates that the corresponding issue ranks in the top 3 (by quarter). Construction costs slipped to a three-way tie for second place as mortgage rates surged from sixth place in 3Q 2018 to first place in 4Q.

Our survey respondents told us:

“Tariffs have hit construction costs in a major way.”
“Construction costs are going too high, too fast.”
“Overall, all input costs are increasing but land opportunities are scarce and very expensive.”

 

 

Please consider Metrostudy your ally for navigating the ups and downs in your local market. Our consulting team provides the research and analysis you need for land committees or investors regarding pending or active new home projects. Metrostudy welcomes your questions about our consulting services, the Sentiment Survey, or Metrosearch, our flagship new home database.

 

Metro DC and Baltimore Team

Ben Sage
Senior Director East Region
bsage@metrostudy.com
703.574.8429

Gregg Lowenstein
Director of Business Development
glowenstein@metrostudy.com
202.394.6883

Debbie Rosenstein
Senior Consultant
drosenstein@metrostudy.com
703.819.1449

Rosemary deButts
Consultant
rdebutts@metrostudy.com
540.454.6792

Maggie Kelley
Consultant
mkelley@metrostudy.com
703.472.0518