Home Building: It's a Cyclical Game

By Mike Beirne, Professional Builder | December 14, 2018
More than two-thirds of builders have rosy revenue expectations for 2019
More than two-thirds of survey respondents have rosy revenue expectations for 2019 in spite of rising costs from material and labor.

A frequent question builders are asked or that they ask colleagues, analysts, and others presumably in the know, is what inning are we in? Home building is a cyclical business and after a five-year run, many inevitably wonder when will the dark side of the moon appear and if it does, how bad will it be? Third quarter 2018 starts for single-family homes were off from the previous quarter and the year-ago period, per the U.S. Commerce Department; September sales were sluggish, and anecdotally, builders report that the fourth quarter was more of the same.

2019 Annual Report & Forecast

Builders list their top opportunities in 2019

Optimism still reigns, with 56 percent of builders in Professional Builder’s 2019 Market Forecast survey expecting to sell more houses this year, and 69 percent anticipating revenue to increase.

Despite the barriers presented by expensive land, fees, and the rising cost for materials and labor, building product for first-time home buyers again ranked among the top market opportunities behind custom home and move-up production-built home buyers—the main drivers for home building since the recovery started. Almost 70 percent of respondents rated last year as “good” or “very good,” and 14.4 percent graded 2018 as “excellent.” More than 75 percent anticipate 2019 to be “good” or “very good,” and 14 percent expect next year will be excellent for their companies.

Builders list their top activities for 2019