The 2023 Housing Crash is getting even WORSE. That's because Home Builders are now reporting massive contract cancellations.
KB Homes, the 6th largest home builder in America, reported that 68% of Homebuyers cancelled their contract to purchase a home in Q4 2022. That contract cancellation rate is even higher than what builders reported in 2008.
The result of homebuyers backing out of their contracts is a big surge in home builder inventory. Data from Zonda shows that "Quick Move-In Inventory", representing houses that are completed or will be completed in 90 days, is up 200% YoY. And up 50% from pre-pandemic levels.
The build up in inventory, combined with the contract cancellations and a decline in buyer demand, indicate that Home Prices will continue to go down in 2023 - especially in metros such as Austin, Phoenix, Salt Lake City, and San Francisco. Prices in these markets are already down 10-15%.
States that can expect to see even more inventory and price declines in the 2023 Housing Market include Texas, Florida, Tennessee, Utah, and Colorado. These are the states with the most homes being built. So big contract cancellations will impact them the most.
Watch out in the next couple weeks as more home builders report earnings. Particularly large ones like DR Horton and Lennar.
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