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Optimism Abounds for Home Builders in 2020

By Rich Binsacca | December 11, 2019
Bar charts shows home builder revenue forecasts.

If there is any pessimism about how housing will fare in 2020, it wasn’t apparent in the opinions of the nation’s home builders.

Representing a broad spectrum of the industry, led by production builders (42.8 percent, nearly two-thirds of which are in the move up/move down segment), custom builders (27 percent), and those diversified into remodeling (12.6 percent), the results of an annual forecast survey conducted by Pro Builder indicate general optimism despite the specter of a mild economic (or “growth”) recession this year and its effect on housing production and sales.

2020 Annual Report & Forecast

Case in point: Only 11.6 percent of home builders who responded say they’ll build fewer homes in 2020 (though another 37.7 percent plan to stand pat), and 66 percent anticipate greater sales revenue—a third of those expecting more than a 10-percent bump from 2019.

Moreover, about half plan to buy land this year, relying on a diverse array of financing options. And while more than 40 percent are “somewhat optimistic” about their local market conditions in 2020, another 22 percent are very optimistic, echoing their rosy revenue forecast. Half look forward to a “very good” or even “excellent” year ahead.

Bar charts shows 2020 opportunities for home builders.

 

Builders also see many opportunities to enable growth, from smaller, higher-performing homes to “recession proof” upscale clients and diversification into home remodeling and light commercial work, among others.

On the downside, 78 percent of builders anticipate the prices of materials and overall bids to increase next year, and continue to face challenges for skilled labor and managing regulations and entitlement fees, barriers that differ starkly from those going  into 2012.

--Binsacca is editor-in-chief of Professional Builder

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