Why Century and Meritage ended Q3 with too much inventory
Century Communities guided to incentives up 2% to 2.5% in Q4, after incentives hit 13% of ASP in Q3
Century and Meritage, two major players in the homebuilding industry, wrapped up Q3 with higher-than-desirable inventory levels. This development is worth noting for the paint industry, as it can have a ripple effect on demand for paint and coatings. When homebuilders hold excess inventory, they often look to move it quickly, which can lead to increased incentives and promotions.
In Century's case, the company saw incentives rise to 13% of average selling price (ASP) in Q3, and they're expecting to offer even more incentives in Q4, guiding to a range of 2% to 2.5% increase. This could mean that Century and other homebuilders will be looking to sell homes quickly, potentially driving up demand for paint and coatings as they try to complete and sell inventory. For paint suppliers, this could be a positive development, but it's also a sign of a potentially slowing market.
As we head into Q4, it's worth keeping an eye on how homebuilders like Century and Meritage manage their inventory levels and incentives. If they're able to move inventory quickly, it could be a good sign for the paint industry. However, if they're unable to sell homes and continue to accumulate inventory, it could be a sign of a larger market slowdown. Paint suppliers and manufacturers will want to keep a close eye on these developments and be prepared to adjust their own production and inventory levels accordingly.
Originally reported by housingwire.com. PaintNews adds analysis for real estate & property readers.