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2022 Housing Forecast: Opportunities and Challenges

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2022 Housing Forecast: Opportunities and Challenges

2021 was a wild ride. Here's a look at what's in store for home builders in the coming year

By Rich Binsacca December 13, 2021
Housing forecast roller coaster
The roller coaster of the past year has seen the housing industry squeezed by the pandemic, labor shortages, supply chain disruptions, and more. | Photo: Pxhere
This article first appeared in the November/December 2021 issue of Pro Builder.

On the heels of a tumultuous 2020, the past year in home building was a lesson in contrasts: record-setting new-home sales and prices balanced by supply chain delays, skilled labor shortages, and materials price increases that hindered production.

For the most part, builders weathered it well, despite angst and adjustments, delivering about 1.24 million new homes in 2021. And they expect to continue that trend into 2022, according to our annual Reader Forecast Survey. Representing a wide swath of builders nationwide, the data paint a picture of optimism and opportunity tinged with ongoing challenges.

Among the opportunities and challenges (see the first two charts, below), the pleasant surprise is that about one-fifth of builders see some sort of industrialized construction in their near-term future, followed closely by new product technologies, and those opportunities likely reflect the top three challenges cited.

“We expect innovation in the industry will continue in 2022 due to higher development costs,” says Robert Dietz, chief economist for the National Association of Home Builders, which forecasts a leveling off of single-family production thanks to ongoing headwinds.


Still, nearly 80% of builders expect to sell more homes next year, with 37.2% of those forecasting to sell 21 or more homes than they did in 2021. With that, more than half of builders expect their revenue to climb at least 7% over this year.

Pandemic-driven factors also will continue to affect the industry. “Work from home, at least part time, is a massive stimulus to many areas where homebuyers and renters can get far more house for their money,” says John Burns, CEO of John Burns Real Estate Consulting. “The future is very different by market and submarket.”

Methodology and respondent information: The 2022 Reader Forecast Survey was distributed to Pro Builder’s print and digital readers between Sept. 5 and Oct. 2, 2021, as well as to builder members and clients of The Shinn Group–Builder Partnerships, Do You Convert, TrueNorth Development, SMA Consulting, IBACOS PERFORM, and the Housing Innovation Alliance. Recipients were offered the chance to win one of four $50 Visa gift cards for completing the online survey. Gift cards were awarded in October 2020. As many as 1,129 responses were recorded and 1,081 surveys were completed. Results were rounded to the nearest whole number.


2022 forecast top challenges for home builders
Asked separately, 68% of builders anticipate materials costs and bid prices will increase in 2022. Despite citing a very (49%) or intensely (18%) competitive marketplace, fewer than 15% of builders consider competition from other new-home builders or resales to be a significant challenge.


2022 forecast top opportunities for home builders
The big surprise here is that more than one-fifth (22.1%) of builders consider off-site home production an opportunity in 2022, up from just 8% last year, perhaps indicating a sea change in the use of panelized and modular solutions to combat ongoing labor shortages and other factors.


2022 forecast optimistic outlook


2022 forecast revenue comparison for home builders
The decrease in revenue in 2021 versus 2020 is a bit surprising given housing’s quick and solid rebound (especially in sales and prices) after pandemic shutdowns in early 2020, but clearly builders expect revenue to fully recover (and then some) in 2022.
2022 forecast land purchasing data
2022 revenue forecast for home builders
With sales still brisk (if cooled since the summer) and sales prices continuing to set records, there’s optimism for significantly increased revenue in 2022.


2022 home sales forecast for home builders
Asked separately, 35% of builders report selling between 26 to 100 homes in 2021, while another 25% report 6 to 25 unit sales, and 18% sold 101 to 500 homes. But regardless of volume, predictions for 2022 are optimistic.



Written By
Editorial Director

Rich Binsacca is editorial director of Pro Builder Media, Custom Builder, and PRODUCTS. He has reported and written about all aspects of the housing industry since 1987 and most recently was editor-in-chief of Pro Builder Media. [email protected]


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