Sheryl Palmer, Taylor Morrison chairman and CEO, joins CNBC's 'Squawk on the Street' to discuss outlooks on housing, consumer sentiment, and more.

Sheryl Palmer, Chairman and CEO of Taylor Morrison, recently discussed the current state of the housing market during a segment on CNBC's "Squawk on the Street." Palmer highlighted that while there is significant demand in the housing market, the expected increase in activity during the typical spring surge has not materialized as predicted.

Palmer explained that the initial months of the year saw varying levels of growth, with modest improvements through March. However, April's performance has been inconsistent. According to Palmer, this deviation from expectations may be attributed to fluctuating consumer confidence rather than inventory constraints.

When asked about the influence of tariffs on housing costs, Palmer noted that while the immediate impact is limited, future tariff increases could lead to more significant effects. Current assessments suggest an increase of one to one and a half percent in purchase prices if tariff escalations occur, but Palmer emphasizes uncertainty around if and when these changes might be implemented.

Despite the challenges, Palmer highlighted that home prices have remained relatively stable, with minor increases in 30 percent of Taylor Morrison’s communities in the previous quarter. Palmer stressed that consumer confidence and interest rates are critical factors in influencing buyer decisions, especially among first-time buyers who are particularly sensitive to rate fluctuations.



Taylor Morrison CEO: There's housing demand but not spring surge

We'll talk about it all with Taylor Morrison, which is actually finding pockets of growth, but does expect tariffs to hit Q4 housing starts. Joining me here is Taylor Morrison, CEO, Sheryl Palmer. Sheryl, it's great to have you. You talked about sort of the cadence of the quarter, started off week in January, stabilized I think you said in February and March. I'm curious what you're seeing in April and how that compares with activity in recent years. Yeah, you're exactly right, Sarah. Thanks for having me today. We started off a little slow in January, and I think we're up about 10% in February and then saw another 12, 13% jump into March. April has been a little bumpy, you know, as I said on the earnings call, liberation day was kind of a day that was unsettling for the consumer. There's certainly demand out there. We're seeing a lot of traffic. We're certainly seeing sales, but we're not seeing the surge that we would normally see between March and April. I think April would generally be a peak in the spring selling season. Is it consumer sentiment or is it the inventories, the housing market dynamic? What is it? I think mostly, I mean, you'll never be able to point to just one thing, Sarah, but I think mostly it's consumer sentiment, confidence. There's a lot going on out there, and they're trying to, you know, process what does it really mean for them. I think to fully appreciate it, you almost need to dissect the different consumer groups. When we think about first-time buyers, very rate sensitive, and the volatility that we're seeing in rates has an outsized impact for this group and truly, you know, leaning into what they can really afford. When you think about your move up, your second move up in our resort lifestyle, maybe some call active adult, they're really focused on the macro. They've got the resources. It's not quite as much about interest rates as just how do they feel. I mean, they're making a very big purchase decision and just want to have a better understanding. So they're just taking a little longer. We're able to move them with incentives, but just taking a little longer than you would normally see in a very robust environment. How do the tariffs impact your costs of construction and ultimately your financials? You know, it's such an interesting question, Sarah, because I've seen lots of predictions out there on what it means, and I don't know how we can know exactly what it means yet because we don't know what this 90-day pause brings. When we think about what we know today, and that would be more the universal 10 percent, it's immaterial. It's literally a couple hundred to a few hundred dollars a house, and that's on newer starts that really will affect the fourth quarter. So it's a rounding error. If we think about 26, if all these tariffs were to go into play, it would have a more meaningful impact. You know, the numbers that we've initially looked at is maybe one to one and a half percent of purchase price. But once again, we don't know if all of that's going to come into play yet. So does that mean it will not raise prices for the consumer on homes? And what's happening overall with prices? I mean, that's been part of the pain here, is that housing prices have not come down that much. They haven't come down, but they haven't moved up materially either. And you know, it's always a little tricky when we talk about where we're raising prices or are we increasing incentives. So I like to look at net pricing. And once again, it's very, very not even market, sub-market, community specific. I think in the last quarter, we saw net prices move up in about 30 percent of our communities. But I would tell you those moves are much more modest, and I think that's OK. So if tariffs were to happen today, would we be able to take all of that? Probably not. It would probably be a shared expense between the consumer and the builder. Cheryl, when it comes to sort of the buyer right now, what do you think is more important? Lower rates? Or how do you get them to sort of the levels you might have anticipated previously? Lower rates or a resolution sort of on the tariff side? I mean, is one more important than the other? Once again, without being redundant, I think it depends on who. I think confidence is probably the more paralyzing effect today. I really do. I think some sort of stability and certainty on what all this macro noise means. I don't even know that it 100 percent has to be settled. I think it's more around just some confidence that we're moving in the right direction. The level of volatility moderates. I think when you think about the first-time buyer, rates are critically important. You know, what we are seeing is a true preference for new. I think the consumer, David, really does appreciate that there's some significant advantages if it's just that the inventory is, you know, 40-plus years old, where that inventory sits, or our ability to help customers with some of these rate buy-downs, forward commitments that really help them get into a monthly payment they can afford.

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