Some builders beat an entry-level retreat. Valera eyes an opening

As many homebuilding operators retreat from entry-level and affordability-driven offerings, the founders of Houston-based StoneManor Homes are countering with a contrarian approach by launching Valera Homes, a new homebuilding brand of homes priced from the $270,000s to the $350,000s. The Valera Homes brand extension arrives at a tricky moment for the most budget-conscious buyer segment. Elevated mortgage rates, higher energy costs, stubborn inflation and weak consumer sentiment have converged to upend the monthly payment calculus for entry-level and value-focused households. Builders have had to resort to “buying sales” through heavy, margin-eroding incentives and concessions. As a result, more builders have scaled back their entry-level exposure and shifted their product mix upmarket, where move-up, active adult and luxury buyers typically require fewer incentives to close. Hovnanian Enterprises, for example, announced during prior earnings calls this year that it was cutting its exposure to most entry-level price points and placing greater emphasis on move-up and active adult housing to generate stronger margins. Meritage Homes, in July, similarly reported an “intentional shift”...