Despite rising mortgage rates and home prices, national builders such as KB Home are exceeding expectations in 2023. A lack of existing inventory has led to increased demand for new homes, resulting in 31% year-over-year growth in new-home sales, according to the U.S. Census Bureau. KB Home's CEO, Jeffrey Mezger, is optimistic that a chronic shortage of existing housing inventory could lead to heightened new-home demand and provide increased opportunities for home builders for years to come.
There were 46% fewer active home listings in August 2023 compared with August 2019, but during the three-month period ending on May 31, KB Home recorded net home sales of 3,936, in line with the 3,914 homes it sold during the same three-month window in 2022, Fortune reports.
In a recent interview with Fortune, KB Home CEO Jeffrey Mezger expressed his optimism about the homebuilding industry’s prospects, attributing it to the chronic shortage of existing and resale housing inventory. Mezger thinks that lack of inventory spells years of opportunity for homebuilders.
“I shared it on our last earnings call: Once we, quote, ‘found the market’ and got our sales pace back [in early 2023], we’ve been raising [home] prices across the footprint and in the second quarter reported that we raised prices in 70% to 75% of our communities during the second quarter. I would say the [house price bottom is in. It’s being caused, if you go macro for a minute, it’s a story that’s true in every city we operate in, there is no [existing] inventory out there,” Mezger tells Fortune.