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    1. Annual Report Forecast

    2023 Home Building Outlook

    Dec. 14, 2022
    Construction Equipment magazine
    Likely due to lingering inflation and rising mortgage interest rates that quell demand, builders are slightly less bullish about selling more homes in 2023 than they were in 2022. Still, nearly 38 percent expect to sell at least 20 more homes next year than this year.
    Likely due to lingering inflation and rising mortgage interest rates that quell demand, builders are slightly less bullish about selling more homes in 2023 than they were in 2022. Still, nearly 38 percent expect to sell at least 20 more homes next year than this year.

    By Rich Binsacca, Editorial Director, Pro Builder Media

    Despite continuing shifts in housing market dynamics—namely, the effects of inflation and the increase in interest rates to help cool it, not to mention lingering pandemic-induced pressures on production—home builders remain generally optimistic about the year ahead.

    See the complete 2023 Annual Report & Forecast.

    Not only do an overwhelming percentage of the respondents to Pro Builder’s annual Housing Forecast Survey think they will sell more homes and generate more revenue, but nearly 70 percent rate the overall health of their companies today as "good" or "very good," and roughly half expect 2023 to be a "very good" or "excellent" year.

    That optimism is especially impressive when you consider the potential barriers to growth and profitability, namely higher labor and materials costs, ongoing supply chain delays, concerns about the overall economy slipping into a recession, and—for the first time in a while—challenges getting buyers qualified for a mortgage loan.

    Construction Equipment magazine
    Asked separately, 60 percent of builders anticipate materials costs will increase in 2023, while 53 percent expect bid prices for labor and materials also will go up. Higher mortgage interest rates might hinder loan qualifying among some buyer cohorts, but competition from other new-home builders, from rentals (8 percent), and from resales (8 percent) were considered minor barriers to success in 2023.
    Asked separately, 60 percent of builders anticipate materials costs will increase in 2023, while 53 percent expect bid prices for labor
    and materials also will go up. Higher mortgage interest rates might hinder loan qualifying among some buyer cohorts, but competition from other new-home builders, from rentals (8 percent), and from resales (8 percent) were considered minor barriers to success in 2023.

    Home builders will  weather those headwinds by focusing more on so-called “recession-proof” buyers, while also embracing new (and presumably more cost- and time-efficient) off-site construction methods that (ideally) alleviate a variety of pressures on production.

    With that, 68 percent of respondents anticipate buying land next year, which is a healthy increase from their 2022 forecast and is supported by their anticipated (if slightly less bullish) uptick in sales in 2023. And, despite the “exodus to the exurbs” touted by many during the pandemic, most of those land deals will be in the suburbs and urban infill plots, an indicator (along with plans to build smaller homes) of higher densities and perhaps more affordable pricing.