Ultra-low mortgage rates, a shortage of existing homes for sale and strong demand for new high-tech houses catapulted homebuilder Taylor Morrison's sales into record territory in June.
The Arizona-based company, the nation's fifth largest homebuilder, saw its net sales increase 94% annually last month, a record pace. It also posted a record sales pace per community.
Sales were strong across the company's portfolio, which covers 22 major housing markets in 11 states. Adding to its sales strength, Taylor Morrison acquired California builder William Lyon Homes in February.
"To experience our best sales month in company history amid a pandemic, amid transitioning our business to a virtual environment seemingly overnight, and amid the economic and psychological impact on consumers speaks volumes to not only Taylor Morrison's resiliency, but our customers' resiliency, too," said Chair and CEO Sheryl Palmer.
"While nearly all of our sales offices are at some degree of open, we are still operating in a new, more virtual world. Our customers and team members have adapted to more online options beautifully, and I believe that is fully reflected in our financial performance."
The company's active-adult segment bottomed in mid-March, but is now recovering with other consumer groups, and cancellations are about the same as pre-pandemic levels.
Palmer credits the success, in part, to new technology and online tools that allow customers to do self-guided tours. Most builders and real estate agents have been relying on virtual and self-guided tours since the pandemic began, but builders have the advantage, as it is easier for them to allow potential buyers to tour homes on their own.
Owner-occupied homes are trickier. Taylor Morrison launched a virtual appointment system, so home shoppers can guide their own homebuying process for everything from tours to closings.
In an interview in early June, Palmer said enhanced home-touring technology stemming from the Covid-19 outbreak has "forever changed the way we do business."
As for what's behind the strong demand, Taylor Morrison conducted a survey in late May and found the number one driver for buyers is better home technology to enable remote working and home schooling.
The second and third drivers were more overall space, potentially for adult children moving back in, and more individual rooms, especially home offices. At the time, urban flight was low on the list, but Palmer says the desire for suburban living is increasing.
Sales of newly built homes plummeted in March, only to rebound strongly in May, up 13% annually, according to the U.S. Census. That strength surprised even the builders themselves, who are struggling to keep up with the new demand. They are up against a lack of land, labor and a slowdown in the supply chain for building materials.
The biggest sales jump in May came in homes not yet started. That caused the supply of homes for sale that were under construction to drop 15% compared with a year ago. June builder sales numbers are scheduled to be released later this month.