Home Builders Face Rising Demand

Builder MDC Holdings’ preliminary numbers for net new home orders registered their highest quarterly increase in years, adding to signs of growing demand for housing.

The Denver-based company recorded a 32% increase in the second quarter to 2,273 from the same period a year ago. This marks the largest quarterly percentage increase in this category since 2012.

Net new home orders were numerically strongest in the West, but based on the regional percentage gain year-over-year, second-quarter demand was strongest in the East.

Orders were up by 75% in the East as compared to 22% in the West and 36% in the Mountain region. By volume, net new home orders in each region were as follows: 1,247 in the West, 689 in the Mountain region, and 337 in the East.

On a year-over-year basis, MDC’s homes in backlog rose 7% during the second quarter to 4,293. This is the largest numbers of homes in backlog since 2006. The company’s backlog conversion rate was 43%, coming in at the high-end of the 41%-43% range previously estimated in its guidance.

New home deliveries rose slightly to 1,514 from 1,512. The average sales price for homes was an estimated $484,000 during the second quarter.

When impairments are excluded, gross margins are on track to exceed 19% for the period.

“Given the success of our spring selling season, we believe that we are well positioned for the remainder of 2019,” said Larry Mizel, the company’s chairman and CEO, in a press release.

In addition to acting as a builder, MDC provides financing to homeowners through its HomeAmerican Mortgage Corp. subsidiary. Other business lines MDC is active in include home insurance. It also provides title and escrow services.

Posted on nationalmortgagenews.com on 7/8/19.