2023 was the year of the homebuilder. The ability for builders, who often have full- or part-ownership in their preferred lender, to buy down consumers’ mortgage rates allowed them to maintain double-digit margins.
Driven by lack of resale inventory and the ability to offer competitive interest rates, new construction grew to comprise roughly 30 percent of total housing inventory in 2023, more than double a normal year.
Many of the top national homebuilders have rosy forecasts for 2024 as well.
“The new home market has been extraordinary in 2023, and I think heading into 2024, we’re going to have the golden age of new home construction,” David O’Reilly, CEO of Howard Hughes, said in a recent CNBC interview.
Economists believe that 2024 will be a slightly better year than 2023 for homebuilders, but that some headwinds will persist, especially for smaller, independent builders, who may lack the economies of scale and access to capital markets that their larger cohorts possess.
At around 30 percent now, the homebuilding industry is likely near the peak level of new home sales as a share of the entire housing market, according to industry experts.
Despite robust new construction, the U.S. housing market is still deficient by anywhere between 1.5 million and 7.3 million housing units due to a severe lack of supply produced between 2012 and 2019.
This year, even with the boom in new-home construction, “we’re expecting a number somewhat below 900,000 for single-family home starts,” Robert Deitz, the chief economist of the National Association of Homebuilders, said. “We need to build above 1.1 million to start reducing our deficit.”
Source: HousingWire
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