London Daily

Focus on the big picture.
Saturday, Aug 02, 2025

'It's crazy. There is no inventory.' Housing industry veteran marvels at real estate boom

'It's crazy. There is no inventory.' Housing industry veteran marvels at real estate boom

Jeffrey Mezger is a 40-year veteran of the real estate industry. He's never seen a stronger housing market than this one.

"It's crazy. There is no inventory," the CEO of KB Home told CNN Business.

For wannabe buyers, the shortage of homes on the market, combined with a surge of competition from other purchasers is setting off bidding wars, all-cash offers and no end of sticker shock.

But this one-two punch of very low supply and roaring demand is suiting homebuilders just fine.

"This is the best housing market I've seen in my career," Mezger said. "It's a good time to be a homebuilder."

KB Home's first-quarter profit swelled by 62%. It handled more home transactions than in any first quarter since 2008. The company's backlog surged by 74% in value, and nearly doubled in the West Coast.

"There isn't a city we're in where I would say it's a tough market," Mezger said.

Not only is KB Home (KBH) making far more money now than a year ago, it's making more money per home built. Profitability per unit is up 73% year-over-year to $41,000.

Record-low inventory


It's the polar opposite of what the company faced during the subprime bust that began around 2007, when the housing market was gripped with a massive oversupply problem that took almost a decade to correct. Construction of new homes collapsed in the aftermath of that crisis and never recovered. The supply of new homes remains very low today.

"We've been under-building for the last 15 years," said Mezger.

As of the end of February, housing inventory tumbled by nearly 30% year-over-year to a record low of 1.03 million, according to National Association of Realtors data that goes back to 1982. Last month, homes typically sold in just 20 days — a record low.

Supply is so short that it's limiting the number of homes getting sold. Existing home sales fell by almost 7% between February and March, according to the NAR, which blamed the decline on "historically low inventory."

Mortgage rates are creeping higher


New home sales have also cooled off recently.

In February, new home sales tumbled by 18% to a nine-month low. Economists blamed last month's freezing temperatures in parts of the United States but also said the sales drop points to concerns about high prices and affordability.

"Mortgage rates are rising, consumers are shifting spending to reopening activities vs. at-home and we aren't looking at the same degree of pent-up demand as in early 2020," economists at Bank of America wrote in a note to clients this week. "We think housing activity is set to moderate."

Mortgage rates remain very low historically, although they have crept higher in recent months. The average interest rate on a 30-year fixed-rate mortgage hit 3.09% last week, the highest since June.

Higher borrowing costs will help cause housing affordability to decline by 5% to 6% this year, despite strong income growth, according to Bank of America.

Surging lumber costs are making homes more expensive


Still, housing CEOs remain upbeat, in part because demand is being driven by a new flock of buyers. Millennials make up the largest cohort of buyers for KB
Home, a trend the company said began before the pandemic.

"Post financial crisis, millennials either saw their parents lose their home, couldn't get a job or had a lot of student debt. Millennials deferred their first home purchase much longer than previous generations," said Mezger.

He added that KB Home is also seeing strong demand from Gen Z homebuyers.

Beyond affordability, one challenge facing homebuilders is skyrocketing construction costs.

Ninety-six percent of builders surveyed in the 2020 National Association of Home Builders survey reported building materials as the top challenge, up from just 66% in 2019.

The No. 1 culprit is the shortage of lumber. Prices for lumber have skyrocketed in recent months because surging demand and shrinking supply, making it much more expensive to build new homes.

The elevated price of lumber alone is adding about $24,000 to the price of new homes, according to the NAHB.

As for KB Home, "We've been able to raise price enough to cover the cost and raise our margin," Mezger said. "Demand is that strong."

Newsletter

Related Articles

0:00
0:00
Close
Trump Administration Finalizes Broad Tariff Increases on Global Trade Partners
J.K. Rowling Limits Public Engagements Citing Safety Fears
JD.com Launches €2.2 Billion Bid for German Electronics Retailer Ceconomy
Azerbaijan Proceeds with Plan to Legalise Casinos on Artificial Islands
Former Judge Charged After Drunk Driving Crash Kills Comedian in Brazil
Jeff Bezos hasn’t paid a dollar in taxes for decades. He makes billions and pays $0 in taxes, LEGALLY
China Increases Use of Exit Bans Amid Rising U.S. Tensions
IMF Upgrades Global Growth Forecast as Weaker Dollar Supports Outlook
Procter & Gamble to Raise U.S. Prices to Offset One‑Billion‑Dollar Tariff Cost
House Republicans Move to Defund OECD Over Global Tax Dispute
Botswana Seeks Controlling Stake in De Beers as Anglo American Prepares Exit
Trump Administration Proposes Repeal of Obama‑Era Endangerment Finding, Dismantling Regulatory Basis for CO₂ Emissions Limits
France Opens Criminal Investigation into X Over Algorithm Manipulation Allegations
A family has been arrested in the UK for displaying the British flag
Mel Gibson refuses to work with Robert De Niro, saying, "Keep that woke clown away from me."
Trump Steamrolls EU in Landmark Trade Win: US–EU Trade Deal Imposes 15% Tariff on European Imports
ChatGPT CEO Sam Altman says people share personal info with ChatGPT but don’t know chats can be used as court evidence in legal cases.
The British propaganda channel BBC News lies again.
Deputy attorney general's second day of meeting with Ghislaine Maxwell has concluded
Controversial March in Switzerland Features Men Dressed in Nazi Uniforms
Politics is a good business: Barack Obama’s Reported Net Worth Growth, 1990–2025
Thai Civilian Death Toll Rises to 12 in Cambodian Cross-Border Attacks
TSUNAMI: Trump Just Crossed the Rubicon—And There’s No Turning Back
Over 120 Criminal Cases Dismissed in Boston Amid Public Defender Shortage
UN's Top Court Declares Environmental Protection a Legal Obligation Under International Law
"Crazy Thing": OpenAI's Sam Altman Warns Of AI Voice Fraud Crisis In Banking
The Podcaster Who Accidentally Revealed He Earns Over $10 Million a Year
Trump Announces $550 Billion Japanese Investment and New Trade Agreements with Indonesia and the Philippines
US Treasury Secretary Calls for Institutional Review of Federal Reserve Amid AI‑Driven Growth Expectations
UK Government Considers Dropping Demand for Apple Encryption Backdoor
Severe Flooding in South Korea Claims Lives Amid Ongoing Rescue Operations
Japanese Man Discovers Family Connection Through DNA Testing After Decades of Separation
Russia Signals Openness to Ukraine Peace Talks Amid Escalating Drone Warfare
Switzerland Implements Ban on Mammography Screening
Japanese Prime Minister Vows to Stay After Coalition Loses Upper House Majority
Pogacar Extends Dominance with Stage Fifteen Triumph at Tour de France
CEO Resigns Amid Controversy Over Relationship with HR Executive
Man Dies After Being Pulled Into MRI Machine Due to Metal Chain in New York Clinic
NVIDIA Achieves $4 Trillion Valuation Amid AI Demand
US Revokes Visas of Brazilian Corrupted Judges Amid Fake Bolsonaro Investigation
U.S. Congress Approves Rescissions Act Cutting Federal Funding for NPR and PBS
North Korea Restricts Foreign Tourist Access to New Seaside Resort
Brazil's Supreme Court Imposes Radical Restrictions on Former President Bolsonaro
Centrist Criticism of von der Leyen Resurfaces as she Survives EU Confidence Vote
Judge Criticizes DOJ Over Secrecy in Dropping Charges Against Gang Leader
Apple Closes $16.5 Billion Tax Dispute With Ireland
Von der Leyen Faces Setback Over €2 Trillion EU Budget Proposal
UK and Germany Collaborate on Global Military Equipment Sales
Trump Plans Over 10% Tariffs on African and Caribbean Nations
Flying Taxi CEO Reclaims Billionaire Status After Stock Surge
×