Research: Home Builders Have a Big Hill to Climb But Remain Key to Supply Shortage

Home builders have a big hill to climb in the new decade but play key role in helping solve the housing shortage and unlocking sales potential, according to recent research from Article highlights:

  • In the millennial era of economic expansion (2012-2019), a total of 5.92 million single-family homes have been constructed. Over the same eight year period, 9.76 million new households have been formed. 
  • Despite a booming economy and healthy household formation, sustained levels of relative under building and unfaltering demand since 2012 have left a sizable gap of 3.84 million new homes
  • Single-family starts per 1000 households have grown from 4.6 in 2012 to 7.3 in 2019, taking the eight year average to an improved, yet disappointing 6.2 starts per 1,000 households, well below the two decade average.
  • Home builder confidence has reached a two decade high at the end of 2019, with lower rates and robust economic growth providing a boost in the outlook for new construction.
  • Demand for new homes remains insatiable, and even with an above average pace of construction, it would take home builders four to five years to solve the gap.
  • A good fit of supply not just volume remains key, and if builders can deliver homes at adequate price points, absorption will continue to strengthen through the first half of the decade.

Read the full paper.