Tri Pointe Homes CEO: New home prices down more than headlines suggest
Tri Pointe Homes CEO Doug Bauer states that net effective prices for new homes have declined more significantly than commonly reported. He argues that buyer confidence, not affordability, is currently the main obstacle to demand.
Doug Bauer, CEO of Tri Pointe Homes, a prominent U.S. homebuilder, asserts that the actual prices for newly constructed homes have fallen more than public perception suggests. Bauer believes that buyer confidence is a more significant factor than pricing levels in the current slowdown of new home demand in key markets.
Bauer emphasizes the importance of looking at net effective prices, which include discounts and incentives, rather than just list prices. He estimates that prices in Tri Pointe Homes' core markets have decreased by 5% to 10% from their 2022 peaks. In broader 'B' and 'C' markets, where builders previously pursued volume, net prices are reportedly down by 15% to 20%.
He notes that new homes are in some cases selling for less than previously owned homes, which he interprets as evidence that price adjustments have already occurred. Tri Pointe Homes utilizes various incentives, such as discounts on upgrades and financing credits, to protect its profit margins. Bauer argues that job security and consumer confidence are the primary drivers of housing demand, rather than mortgage interest rates alone.
Bauer reports that Tri Pointe Homes' sales pace is currently slightly below the industry average, but highlights strong performance in regions like Inland Empire, San Diego, Arizona, Colorado, and Utah during the second quarter. Despite a slowdown in Austin, Texas, Bauer maintains a long-term positive outlook for that market, driven by tech sector growth.