Officials from three of the nation’s top homebuilders, Ryland, Meritage, M/I Homes, ranked as number 9, 11, and 16, respectively, have all reported a drop in sales following the expiration of the Homebuyer Tax Credit. At M/I Homes, second quarter sales fell by 21 percent due to a dramatic drop in the May/June numbers, while the quarter for Ryland was even worse with a sales decline of 44.2 percent. And while some builders have expressed surprise at the extent of the slowdown, stating they did not expect it to be as severe or prolonged, most are making significant adjustments to their future building plans.
The nation’s largest home builders, in a struggle similar to manufacturers, have been on a cost cutting binge, laying off excess workers, reducing prices on inventory, cancelling planned expansions and land acquisition. And the subsequent reductions in operating costs have resulted in profits for some while reducing the recent losses of others.
However, builders are not only becoming leaner, they seem to have recognized the realities of a changing market, and are also making adjustments to their product by reducing overall square footage, eliminating costly extras, and offering more economical and efficient designs. While some in the building industry may have been taken by surprise, anticipating a more rapid turn-around in the market, most now seem aware that the recovery will be slow in coming and that the industry must adapt in order to survive.
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