These are the 7 worst housing markets according to Lennar – Barron’s | Jewelry Dukan

Higher mortgage rates have hurt home sales nationally — but as the saying goes, all real estate is local.


the country’s second-biggest home builder by market cap on Thursday listed the real estate markets that are holding up best and worst.

The homebuilder was one of two to report earnings this week for the quarter ended August 31st.


(Ticker: LEN) and the smaller builder

KB Home

(KBH) topped estimates for earnings per share but said orders had fallen as higher mortgage rates hurt buyers’ bottom line.

“Housing is once again at the forefront of everything happening in the economy and the Fed’s use of its interest rate tool to curb inflation is certainly having the desired effect on the home for sale market,” Stuart Miller, Lennar’s chief executive officer , said when announcing the company’s third-quarter results.

Lennar is adjusting prices and offering incentives to increase traffic, executives said. The company’s net selling price for new orders was 9% lower than in the second quarter but 1% higher year-over-year, co-CEO Richard Beckwitt said on the earnings call. In the third quarter, incentives for new orders rose to 6% in August from 2.3% in June, he added.

“While we’re cutting prices and increasing incentives, the demand is still there,” Miller said. “These fundamentals give us confidence that while there is reconciliation in the short and medium term, the long-term prospects for housing remain bright.”

Not every housing market required the same tough love. Beckwitt sorted housing markets into three categories: those that have continued to perform well, those where sales momentum picked up after the company adjusted prices or incentives, and those that may require further price adjustments to boost sales.

Sales remained strong in nine areas, Beckwitt said. These include New Jersey; Maryland; Virginia; Charlotte, NC; Indianapolis; San Diego, California; and three markets of Florida: the Southwest, the Southeast, and the Palm Beach area.

“These markets are benefiting from extremely low inventories, and many are benefiting from strong local economies, job growth and immigration,” Beckwitt said, adding that Lennar offered mortgage buyback programs and some incentives to keep the pace of sales going. “Some communities in these markets have required limited targeted pricing adjustments,” he added.

Most of the places fell into the second category. The company said it made “major adjustments to regain sales momentum” in more than 20 markets. Among them were some of the hottest markets of the pandemic real estate boom, like Phoenix, Dallas, and Tampa, Florida.

Other areas in this category were Orlando, Florida; Jacksonville, Florida; the Coastal Carolinas; Atlanta; Chicago; Nashville; Raleigh, NC; Houston; San Antonio; Tucson, Ariz.; Las Vegas; Colorado; Seattle; and several parts of California including the Coast, Inland Empire, Bay Area, Central Valley, and Sacramento.

Traffic has slowed in each of those markets and cancellations have increased, Beckwitt said, adding that the company offered buyer perks like “aggressive” financing programs, price discounts and increased incentives to increase sales.

The company says the buyer pullback has been sharpest in seven markets, including Boise, Idaho, where prices have skyrocketed early in the pandemic amid lower interest rates and the boom in working from home. “While the drivers and individual dynamics of these markets are somewhat different, traffic has slowed significantly,” Beckwitt said. Other markets in this category are Philadelphia; Pensacola, Florida; austin; Reno, Nevada; Minnesota; and Utah.

Many buyers in these markets “need to be convinced that now is the time to buy,” Beckwitt said. “There is concern that sales prices have not bottomed out, which has led to an increased number of cancellations.”

Lennar isn’t the only one sweetening deals for potential buyers. More than half of homebuilders surveyed by the National Association of Home Builders in September said they offer incentives like mortgage rate buybacks and price cuts to boost sales, the trade group said earlier this week.

While builders are courting buyers, existing home sellers have retreated. The inventory of existing homes for sale fell at the end of August for the first time since January, according to National Association of Realtors data released Wednesday. Sellers “don’t want to give up that 3% mortgage rate,” the association’s chief economist, Lawrence Yun, said at the time.

Write to Shaina Mishkin at

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