As last year's mortgage rate shock threw the U.S. housing market into a sharp slowdown, many homebuyers started to get cold feet, worrying they'd be buying at the peak. Some of those buyers even backed out of their contracts, and left their earnest money on the table. That saw the cancellation rate at D.R. Horton, the nation's largest publicly traded homebuilder, spike from 16% in the first quarter of 2022 to 32% in the third quarter of 2022. It was starting to look like builders might be in for a bumpy ride.
Fast-forward to June 2023, and stocks of homebuilders including D.R. Horton and Lennar have set new all-time highs, as new home sales continue their speedy resurgence. Consider D.R. Horton, in particular, which saw its cancellation rate fall back down from 32% in Q3 2022 to 18% in Q2 2023.
