Currently Reading

More Home Builders Pivot to Entry-Level Product

Advertisement

More Home Builders Pivot to Entry-Level Product


July 18, 2019
neighborhood of houses
Photo: Unsplash/Maximilliam Conacher

As Millennial home purchases pick up, more builders are making efforts to add affordable, entry-level products to their portfolios, Forbes reports.

“Normally the first-time homebuyer group leads the pack in a housing recovery, and the move-up group fills in later,” said Jeff Mezger, CEO of KB Home. “This time around, it was flipped; the millennials delayed buying for a decade, and the industry was fed by the move-up segment. Now, we’re finally starting to see a normal housing recovery.”

KB Home has always focused heavily on the first-time homebuyer audience, so this is nothing new to them, but the first-time segment is growing rapidly for that company. Mezger noted that 55% of KB’s new home deliveries in the second quarter of 2019 were to first-time home buyers, which is the highest percentage in a decade (KB had been tracking 50%-52% for a long time). Mezger attributes some of their success in attracting first-time homebuyers to KB Home’s built-to-order business model which allows more personalization than some other builders.

D.R. Horton, the largest homebuilder in America, has pushed the envelope with regard to building homes that first-time homebuyers could afford. They have offered homes in the sub-$200,000 range through their Express Homes brand for five years now. Their success stimulated other homebuilders to start building smaller, more price-effective homes. Very few can compete and be profitable at that price point, particularly with lot and land prices at levels near the bubble peak, but many are nonetheless reaching lower price points than they had historically done.

Read more
 

Related Stories

Affordability

Pandemic Likely to Further Strain Cost-Burdened Homeowners

The number of homeowners that were cost-burdened dropped 9% overall during the past nine years, but low-income households only experienced half of…

Housing Markets

Cities Where Buyers Can Afford the Most and Least

Housing affordability continues to be an issue for many Americans. Nearly 67% of Americans are bunkered down by at least one non-mortgage debt.…

Housing Markets

These Cities Are Becoming More Affordable for Renters

More than 40% of renters pay more than a third of their income on housing costs, meaning affordability typically affects renters more than it…

Advertisement

More in Category




Advertisement

Create an account

By creating an account, you agree to Pro Builder's terms of service and privacy policy.


Daily Feed Newsletter

Get Pro Builder in your inbox

Each day, Pro Builder's editors assemble the latest breaking industry news, hottest trends, and most relevant research, delivered to your inbox.

Save the stories you care about

Lorem ipsum dolor sit amet lorem ipsum dolor sit amet lorem ipsum dolor sit amet.

The bookmark icon allows you to save any story to your account to read it later
Tap it once to save, and tap it again to unsave

It looks like you’re using an ad-blocker!

Pro Builder is an advertisting supported site and we noticed you have ad-blocking enabled in your browser. There are two ways you can keep reading:

Disable your ad-blocker
Disable now
Subscribe to Pro Builder
Subscribe
Already a member? Sign in
Become a Member

Subscribe to Pro Builder for unlimited access

Lorem ipsum dolor sit amet, consectetur adipisicing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua.