Steady price gains and rising interest rates have created a roadblock for homebuyers struggling to find affordable options in an inflated market, but according to Tri Pointe Homes CEO Doug Bauer, demand remains historically strong. In the second quarter of 2022, Tri Pointe Homes topped $1 billion in sales and had a $3 billion backlog of sold homes across 10 states and Washington D.C., Insider reports.
Rather than delaying new-home construction, builders such as Tri Pointe are moving full-speed ahead and offering incentives to buyers. In the long term, Bauer expects conditions to improve even in the event of further interest rate hikes as the market slowly normalizes post-pandemic.
Bauer says there's very strong demand for new homes, while past generations of home buyers who've locked in mortgage rates of around 3% don't have much incentive to sell. So he says that builders like himself are in pretty good shape and they won't cut way back on construction.
"The new home builders, if you really study the business right now, are in a really good position," he said, adding that if mortgage rates spike, buyers might get cautious in the short term, but conditions will still look good over the long term.