Amid soaring mortgage rates and a bleak economic outlook in the fourth quarter of 2022, major home builder KB Home reported a cancellation rate of 68%—a more than 50% increase from the publicly traded home builder’s 13% cancellation rate during the same period the previous year. To attract wary buyers and keep projects on track, KB Home, along with a number of other home builders across the U.S., offered up mortgage rate buydowns and home price reductions.
Just three months into the new year, those incentives appear to be working. During the first quarter of 2023, KB Home reported its cancellation rate was down to 36%, and as housing affordability improves, builders are anticipating a busy start to the spring buying season, Fortune reports.
“As we entered the spring selling season during the quarter, we began to see an increase in [housing] demand. This reflected in part the targeted sales strategies we deployed, together with a stabilizing mortgage interest rate environment. As a result, we achieved a sequential improvement in our net orders in both January and February, and net orders have remained strong in the early weeks of March. Although there are still considerable interest rates and economic uncertainties, we are encouraged by this progression,” Jeffrey Mezger, CEO of KB Home, told investors on Wednesday.
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