Rising mortgage rates, which usually lead people to buy homes more quickly, are not providing incentives for potential homeowners to buy any faster, said Allan Merrill, president and CEO of Atlanta-based Beazer Homes.
“Ordinarily, an uptick in mortgage rates acts as a bit of an accelerant, pulling demand forward as buyers worry about getting hurt by future rate increases,” Merrill said in a Thursday conference call. “…Instead of pulling forward next quarter’s demand, we’ve seen a little bit of the opposite. A lack of urgency has crept back into some buyers’ minds.”
Calling rising rates “an elephant in the room,” Merrill said the rate increase has meant softer demand. Houses are still relatively cheap, he said, but higher rates mean buyers will get less for their money.
Still, he said, more homes are needed.
“While we may not be in the first inning of the housing recovery, we’re still a long way from the seventh inning stretch,” he said.
Beazer’s new home orders dropped 11.2 percent in the third quarter, from the same quarter of 2012, because the company was selling homes in fewer communities. Average closings were up 11.3 percent and the average sales price of a home rose 11.7 percent.
Beazer lost $5.9 million in the quarter, after losing $37.9 million in the third quarter of 2012. Merrill said he expects the business to be profitable in 2014.
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